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Former Minnesota House speaker urges long-delayed tax reform

Margaret Anderson Kelliher talks about tax reform, angel credits and why Minnesota needs to create an environment where entrepreneurs can fail.

It’s been a dizzying few months for Margaret Anderson Kelliher. She went from Minnesota House speaker — and arguably the most powerful woman in the state — to failed Democratic nominee for governor, to possible Minnesota Parks Board chair, and now president of the Minnesota High Tech Association (MHTA).

MHTA hailed Kelliher’s hiring as a major coup. The association will need all of Kelliher’s Blackberry contacts because it faces a vastly changed Legislature than the one she helped lead. The newly empowered Republican leadership promises job growth but also severe budget cuts.

Kelliher chatted with MedCity News about tax reform, angel credits and why Minnesota needs to create an environment where entrepreneurs can fail.

Q. The Republicans equate reducing or even eliminating the corporate tax rate with creating jobs. Do you agree?

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Margaret Anderson Kelliher: I think the next governor is going to face both a tremendous challenge and an amazing opportunity to modernize the current tax system in Minnesota, to modernize it in a way that’s going to be beneficial to job creation and to make it so that people can understand how it works.

There’s always going to be some element of complexity, but I think there is strong evidence that it’s not necessarily wiping out the corporate tax that will help create jobs, but updating a tax system that makes sense for a modern economy. I think it’s really having a tool box that’s got the flexible tools in it for the state to get job growth going. I don’t think tax issues alone are the only issue people care about here. I think people want a fair tax system, a tax system that produces the outcomes that people need to have a strong economy.

Q. After years of futility, how did you and your fellow lawmakers finally pass tax credits for angel investors?

MAK: I think the years of advocacy by the community that was promoting angel investor and increasing R&D tax credits really paid off in the importance of having these two tools in the tool box for the businesses in Minnesota. It was evidence-based, looking at what other states were doing. We need to spur job creation in the state of Minnesota. Finding proven tools to be able to do that is important to people.

Angel investor credits made sense because we have the capacity in our research institutions to do a lot of the groundbreaking research that can be commercialized. But the evidence says that after the idea is ready for commercialization, that commercialization is going to one of the two coasts. Why is that? And angel credits are just one tool that can help make that commercialization can happen in Minnesota. Other factors are [science and math] education, the need for a culture of innovation, creativity and entrepreneurship. That’s some of the reasons why I was attracted [to MHTA]. I want to keep working on those issues.

Q. How do we build that innovation culture?

MAK: Many of [Minnesota’s 20 Fortune 500 companies] started off as the entrepreneurial businesses we want people to start today. I think we can learn lessons from how those entrepreneurial efforts [developed into the] the mature businesses they are today. We do have work to do, to make Minnesota more of a culture that’s more accepting of going out and trying something and if it doesn’t work where do you come back and land? If it doesn’t work out the first time, they are accepted and can try again.

Q. Should Minnesota just focus on strengthening medical devices? Or should we try to develop other industries?

MAK: It’s important where you have a really big strength to keep that strong, to really make sure that foundation is stable, that we’re able to grow off that strong foundation. Medical devices makes sense. Minnesota can really work to dominate [clean energy] in the Upper Midwest and the country. We need to make sure MHTA is really inviting those companies in, those companies that are both innovating on that front but also building the components that make it all work.

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I would say a diversified portfolio will be very important to Minnesota on the job front. We see that when you rest on only one or two industries, you have less ability to weather the economic storms in the future. It’s about smart growth in the economy of the future of Minnesota. About being purposable around the climate we’re creating [to support] job growth. It’s not ignoring the medical device industry. It’s the ability to add on to that.