(The Center Square) – Gov. Tim Walz has launched a nationwide campaign to attract businesses to Minnesota, even as the state imposes some of the highest costs and regulatory burdens on corporations in the nation.
“From small businesses to Fortune 500 companies, we’re focused on maintaining our record as a top state for business,” Walz said Monday. “By telling the stories of companies who’ve found success in our state, we’re encouraging other businesses to look to Minnesota to grow and invest.”
The new initiative, created in partnership with Explore Minnesota and the Minnesota Department of Employment and Economic Development, aims to attract businesses and population migration by promoting notable success stories.
But the Minnesota Chamber of Commerce has signaled the state’s business climate declining in its 2024 report released last October.
“Unfortunately, Minnesota has become less competitive as other states use budget surpluses to reduce tax burdens and rates,” the report says, referencing 13 other states that have cut corporate income taxes since 2021. “Minnesota will have the highest corporate rate in the nation in 2024. Studies show high rates undermine investment, startups, talent recruitment and retention and lower economic growth.”
The report cites Minnesota’s slow overall economic growth, high taxes and regulation, increasing cost of doing business, demographic challenges, and negative net domestic migration as part of the problem.
Other economic and business reports show similar findings.
According to the Tax Foundation’s 2024 State Business Tax Climate Index, Minnesota levies the highest top statutory corporate tax rate in the nation at 9.8%. The foundation also ranks Minnesota 45th out of the 50 states in business tax climate.
The ALEC-Laffer State Competitiveness Index ranks Minnesota 48th in economic competitiveness, and the Massachusetts High Technology Council ranks Minnesota 39th in cost of business. The council’s report adds, however, that the state still ranks 6th in growth and innovation.
“Minnesota’s diverse economy serves as a foundation for businesses to start, grow, and prosper. We are proud to be ranked one of the best states for businesses bolstered by one of the highest-caliber talent markets in the country,” Lieutenant Governor Peggy Flanagan said, referencing CNBC’s 2023 “Top States for Business” report. We invite people to explore what our state has to offer for businesses and their employees.”
But the same report also gave Minnesota a C- for business friendliness and a D+ for cost of doing business.
“When CNBC releases its “Top States for Business” each year, it’s largely reported as an accurate ranking based on elements of conducting business. In 2023, Minnesota ranked 5th best state for business in the nation, according to this report,” the Minnesota COC report acknowledged. “But their methodology gives more weight to elements of ‘life, health and inclusion,’ than to factors such as cost and business friendliness, which businesses would prioritize.”
