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Editorial: State should mind its reputation

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The Gopher State ranks fourth in the Tax Foundation's 2014 State Business Tax Climate Index. Before you get excited, that's fourth from the bottom.

The annual list from the Washington, D.C.-based conservative think tank came out last week.

Contrast that to the Forbes 2013 list of the Best States for Business, which placed Minnesota in the top 10.

What gives?

The Minnesota Chamber of Commerce notes that earlier ranking is for 2013 and the latest is for 2014. The Forbes ranking didn't take into account the effects -- many of them unknown -- of the 2013 Legislature's actions, including new business-to-business taxes that many DFLers including Red Wing Sen. Matt Schmit now say went too far.

Scott Drenkard and Joseph Henchman, who wrote the Tax Foundation's report, said Minnesota's tax changes will reduce the state's competitiveness. Taxes are a fact of life, they said, "But not all tax systems are created equal."

Some states don't tax just about everything in a big, big way. Meanwhile, Minnesota seems to more and more.

"There are several states that do without one or more of the major taxes: the corporate tax, the individual income tax or the sales tax," they explained. "Wyoming, Nevada, and South Dakota have no corporate or individual income tax; Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax."

The new warehousing tax enacted by the Minnesota Legislature and signed by Gov. Mark Dayton that will take effect next spring, for example, is one tax that Red Wing employers and manufacturers in particular have labeled as dangerous.

Did Minnesota lawmakers intend to give border communities' bread-and-butter businesses yet another reason to look at relocating to another state?

More financial reports and rankings will come out before lawmakers convene next February. As they do, we urge lawmakers to remember that no matter who is spinning business climate data, Minnesota must address its growing anti-business reputation if the state hopes to see existing businesses grow and local entrepreneurs create new ones ... and open them here.

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