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Wisconsin Republican to Minnesota Business Owners: Come to the Land of Lower Taxes

In response to Gov. Mark Dayton's budget proposal, Rep. Erik Severson (R-Osceola) sent an open letter to Minnesota business owners on Tuesday encouraging them to relocate to Wisconsin, where their business will be welcomed with "open arms

Rep. Erik Severson (R-Osceola) is taking an interesting approach to business and politics.

Rather than reaching across the aisle, the Wisconsin Republican is reaching across the St. Croix River and telling Minnesota business owners that Wisconsin “welcomes your business with open arms and low taxes.”

In response to Gov. Dayton’s budget proposal, Severson is encouraging Minnesota businesses owners to relocate to Wisconsin.

“In the private sector, one of the most important rules for running a business is not spending more than you have. It’s a concept with which your governor, Mark Dayton, seems unfamiliar,” Severson write in an open letter sent to Minnesota business owners on Tuesday. “He does not seem to understand that high taxes drive businesses out—out of business and out of his state. Fortunately your neighbors to the east are ready to welcome your business with open arms and low taxes.”

Severson’s letter goes on to outline why he thinks Minnesota businesses could see more green—as a result of lower taxes—on the other side of the river.

“I believe it is important to outline the options for businesses in Minnesota by letting them know that here in Wisconsin we value job creators,” Severson said. “Governor Dayton’s budget proposal, especially his tax on business-to-business transactions, will put a stress on businesses and reveal that Wisconsin is a better place to do business.”

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Severson has been vocal about the different approaches being taken by Minnesota and Wisconsin to close their budget deficits.

Dayton’s proposal calls for a $2.1 billion sales tax increase in order to eliminate a $1.1 billion deficit, Severson writes. By contrast, Wisconsin turned a $3.6 billion deficit into a $484 million surplus in just two years without raising taxes.

“We are moving Wisconsin forward by promoting job growth through lower taxes on families and small businesses,” Severson said. “I would encourage all business owners, small and large, to take a close look at Governor Dayton’s proposal and decide if the cost of doing business in Minnesota is too high. If that’s the case, I am ready and willing to help businesses make the move across the river into Wisconsin.”

Click here to read Severson’s open letter to Minnesota business owners.

Susan February 05, 2013 at 08:11 PM
Dayton's proposal for sales tax 5.5% Sales tax in St. Croix County 5.5% INCLUDING clothing under $100 Wisconsin corporate tax rate 7.9% Dayton's proposal for a new corporate tax rate 8.4% Being as I don't sell clothes and already charge sales tax, my customers are looking forward to a lower sales tax rate. Being as corporate tax rates are being reduced, if I choose, I can lower prices. This proposal saves me and my customers money! I don't believe that one half of one percent in a corporate tax rate savings is worth it (for me) to move to and re-establish my business in another state. Maybe for those with more profit, but certainly not for me. The work, re-establishment of a customer base, and loss of revenue during this time is too much hassle and too high a cost to even consider.
Kris Janisch February 05, 2013 at 10:58 PM
This did remind me of Kieffer's line: “A better budget for Wisconsin.” I think it was going around the GOP when Dayton introduced his budget: http://patch.com/A-1wtF
Susan February 05, 2013 at 11:20 PM
I do believe it's just going to be another Republican "talking point". The Minnesota R's will say that it will drive people out of the state and now the Wisconsin R's are telling people their state has better tax rates for businesses. In my case, it is simply not true. I already charge sales tax so there is no increase there in the new added items, in fact my customers will save money if this rate goes down. I don't really have many "business-to-business transactions" so this is null and void, and one half of one percent of a lower corporate rate is not nearly enough to even consider a move. It still irritates me that the Republicans completely ignore all the good ways that Dayton's proposal will help businesses, jobs, and individuals and focus only on the negatives. More partisan press releases and one-sided negative talking points. How about some real and specific examples of how Dayton's proposal will affect small and medium-size businesses run by those in the middle class, instead of saying a lot of words that have no meaning?
Randy Marsh February 05, 2013 at 11:42 PM
Dayton would have not had all this complaining to worry about if he wouldn't have proposed such a significant increase in spending. As I have suggested previously, however, I believe he is also making it easier for the DFLers in the legislature by making such grand proposals that will undoubtedly be adjusted downward and other things eliminated (such as the tax on services) and then they can claim to be working in a more moderate and bipartisan manner. The governor's budget is nothing more than grandstanding and the end product will be far more agreeable to those in the middle.
Susan February 05, 2013 at 11:46 PM
Wisconsin's unemployment rate is more than a point higher than Minnesota's. Interesting that they boast about fixing their budget yet they aren't having as much luck getting more of their citizens back to work.
Vicki Strong February 06, 2013 at 04:02 AM
As a former economic development marketing director, I would say a 0.5% difference in taxes isn't enough to push most rational business owners to move; those who do have been unhappy with other things, too. And most will wait a couple of years for tax changes to actually impact their bottom line before considering a costy move. Taxes are just one location consideration and often not at the top of the list. Most companies also need an available, educated and qualified workforce, infrastructure including technology and business services, close location to key customers, freeway and airport access. Low unemployment is not a wholly good thing for business as it results in a competitive hiring environment where the employee can demand more -- more income, more benefits, more perks. Meaning less corporate profits. The negatives of high employment are somewhat balanced by a(n assumed) more robust economy, but are still a part of the overall equation. For smaller businesses, we found a surprising issue is where the boss lives/is willing to live, and/or how far they are willing to commute. Most corporate wives would not be happy in Osceola, lovely as it may be. Rep. Severson is jumping the gun trying to recruit Minnesota businesses based on a proposed budget. The wrangling hasn't started yet, much less any corporate blood-letting.
Chris Soukup February 06, 2013 at 12:37 PM
Susan, It's the 5.5 percent tax on business services that has most people worried. I'm glad you don't believe your business will be affected, but many will be. In reality, unless you dont plan to utilize any of the services that are affected by the tax, you will be be affected too. Do you really think that cost won't be passed on? In all it will take an estimated $2 Billion out of small business owner's pockets each year. That is significant. I agree that a .5 percent increase in the overall rate isn't the end of the world, but that certainly isn't the whole story here. I also agree with Randy and would be surprised if Dayton didn't ditch a few aspects of the proposal. PS- If you really want to discuss the spouting of talking points, please read Rep. Ward and Senator Kent's comments on the proposal. They are almost exactly the same!!
DJR February 06, 2013 at 05:37 PM
Susan: Of course this would not make sense for a majority of business owners. However, if a business is has a lease coming due, or is looking to expand it may be a perfect option. A small increase in businesses or employment opportunities can have a great impact on a small community like Osceola. So yes, you can speak for your own business, however, it may be a very viable option for others to move across the river.
Susan February 06, 2013 at 11:08 PM
Thanks, Chris. I haven't come across anything YET that will directly affect me in an overall negative way once you figure in the corporate rate deduction, but I do plan to read it more thoroughly. You've piqued my curiosity, do you have a link to those other statements? I'm not seeing it above. Thanks.
Susan February 07, 2013 at 12:42 AM
"The St. Paul Pioneer Press says Dayton's office has responded to Severson's letter by saying job growth is not dictated by taxes and that Severson should focus on his own state. The statement from the governor's office also says Minnesota's economy has fared far better than Wisconsin's in recent years."
Kris Janisch February 07, 2013 at 12:47 AM
A serious question, and I'm not a macroeconomics guy. What makes one state more conducive to business growth than another? I know we have a lot of Fortune 500 companies in MN (wife works at 3M, god bless the place). But it's hard to pinpoint the specifics. Don't want to stir it up, just wondering.
Shawn Hogendorf February 07, 2013 at 03:22 AM
Dayton opened his State of the State address responding to Rep. Severson's open letter: "According to our Department of Employment and Economic Development, there are over 72,000 more jobs available in Minnesota today than when I took office two years ago. Almost 52,000 of those jobs were added in the past year. Minnesota’s job growth in 2012 was the 12th best among all 50 states; and we outperformed three of our four neighbors. Iowa ranked 30th best; South Dakota was 44th. Wisconsin, which by the way is open for business, helped bring up the rear at 42nd. And, help spread the word across the St. Croix, their unemployment rate last month was 20% higher than ours, while our per capita income was 12% higher than theirs."
Susan February 07, 2013 at 03:30 AM
Hahaha I think Representative Severson's plan to get a little attention may have just backfired. I suppose, football season is over and we must keep the rivalry going...
Kris Janisch February 07, 2013 at 03:30 AM
And here's the text of Dayton's speech, via his website: http://mn.gov/governor/newsroom/pressreleasedetail.jsp?id=102-54689
Shawn Hogendorf February 07, 2013 at 03:50 PM
If it's a rivalry it's short-lived, Susan. I asked Rep. Severson if he would like to respond to Dayton's comments and address the employment numbers that were mentioned... Here's what his office sent me: "At this time, our office has no comment."
Susan February 07, 2013 at 04:17 PM
I'm sure he probably needs to wait to get the leadership approval first. FYI, now all of those comments show up again, including yours above. Did you do something or did I just have the perfect timing?
Shawn Hogendorf February 07, 2013 at 04:24 PM
It appears that you have the magic touch, Susan. I don't handle any of the IT stuff of the site.
Frank McGruber February 07, 2013 at 07:48 PM
Except that Dayton's statement is based on a logical fallacy. Correlation != causation.
Vicki Strong February 07, 2013 at 09:56 PM
Kris: Your question about what makes a state conducive to business growth is a good one, and not always one that even economic developers can fully answer. But, here's one example of how growth can happen. Many states grow business by supporting industry clusters that naturally germinate on their own. Minnesota has for years been a formidable med-tech location. Much of it was the result of U of M and Mayo doctors who were pioneers in medical treatments (first open-heart surgery; external pacemaker; bone marrow, kidney and pancreas transplants) and the symbiosis that developed between them and manufacturing. For instance, a heart doctor knew Earl Bakken, presented him with a problem, and the pacemaker was developed. From that grew Medtronic, then came smaller electronics or clean room manufacturers to supply parts to Medtronic which needed to be located close by for product development and delivery. Before long, the state had a medical industry-trained workforce, many entrepreneurs who would launch their own companies, suppliers with the technological know-how to branch out into additional products, and a higher education system that developed home-grown talent through classwork and internships. Then came competitors like St. Jude and complementary businesses such as 3M's Life Sciences Sector, which was able to apply 3M's core competencies (such as tape and films) to the medical industry. Buy me coffee at Brix some morning and I'll explain more!
Kris Janisch February 07, 2013 at 09:57 PM
Thanks Vicki! Consider the next latte on me.
Susan February 08, 2013 at 02:00 AM
That's why I deleted my comment. After again reading what Vicki wrote here on Tuesday, I thought she would be better able to define and explain, being as my personal experience and business don't really qualify.
Jason Thomas February 10, 2013 at 05:24 PM
No reason to let a legislative injustice to the 2nd ammendment go to waste. If you dont know what I speak of I'll tell you. If some or most of those proposed gun control bill are passed in your state it will close some very profitable businesses that contribute to your state via taxes, employment, and sales taxes from things those employees buy. Why wouldn't Wisconsin want that revenue? We in Wisconsin up hold the Constitution. In turn why not reap the benifits?

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