Wednesday, January 5, 2011

Jobs and Taxes in Minnesota

For most Minnesotans, Osceola, Wis., is a place to stop for a burger or gas on our way to or from somewhere else.

More recently, though, the quaint rural village perched atop the bluffs of the St. Croix River has become a microcosm for the global economy.

Polaris Industries, the Medina-based recreational vehicle maker that has operated in Osceola for 19 years, announced in May that it will close its plant and shift operations to Mexico. The layoffs begin in March, and eventually the region will say goodbye to 500-plus jobs that pay an average wage of about $16 an hour, plus benefits.
For decades, western Wisconsin feasted on Minnesota firms looking for cheaper places to set up shop. The Badger State dangled lower rates for everything from corporate income taxes to workers' compensation.

My comment:

This story also illustrates a point. No matter how low taxes are, they will always be lower elsewhere. So calling for cutting them to stimulate jobs is ultimately a losing proposition. Consider the fact that so-called high tax states are where the biotech jobs are, as pointed out by Thomas Lee and Bill Hoffman. Lowering business taxes indiscriminately is not the answer. Investment tax credits and investment in high-tech start ups needs more attention right now than simply cutting taxes, as there is no incentive for these cuts to be used for job creation.
posted by wbgleason on Jan. 5, 11 at 6:44 AM | 
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