Minnesota, like the rest of the states in our glorious union, must begin to look very closely at its economic condition.

As more and more Minnesotans struggle to pay their bills today and to plan for whatever foreseeable impact the nationwide and global financial collapse may have and their individual families, the time has come for government at every level to reevaluate policies and shift direction.

In Minnesota, the income tax rate for many families is just over 7%.  Sales tax in Minnesota has become a very complicated issue- the taxes vary greatly. In Minneapolis, for example, the taxes on a meal at a restaurant where there is no live entertainment is 7.15%. The taxes at a bar in Downtown Minneapolis where there is live entertainment may be as high as 15.65%.  Click on the link to read the examples of how to compute the tax and you will see that the system is as easily navigable as rapids via pontoon.  MN corporate tax rates are 9.8%. This is one of the highest tax rates in the country. (Actually the world...)

MN is probably about to lose one of its large employers- Northwest Airlines. We Minnesotans have bailed this company out repeatedly over the years. In 1992, NWA and the Metropolitan Airports Commission came to an agreement that would require NWA to maintain its headquarters in MN, operate a hub in MN and retain employees at the 1992 level in exchange for the MAC issuance of $275 million in bonds.  Now, Delta must decide whether to play ball in MN or pay up to the bondholders. Click here for Strib editorial. 

If you were Delta executives, what would be the benefits of staying and what would be the benefits of leaving.  The maximum individual tax rate in Georgia is 6%. The maximum sales tax rate in Georgia is 7%. The corporate tax rate in Georgia is 6%.  It is a possibility that Delta may decide that lower taxes at every level offer plenty of incentives to pull much of its infrastructure out of MN. MN is not negotiating from a position of strength.

More companies in MN will look to our neighbors, like South Dakota, for similar reasons. South Dakota has a sales tax of 4%. South Dakota is considered to be one of the most pro-business states in the country: SD Income tax and Corporate tax rates remain a steady 0%. 

As of the most recent publications of state by state unemployment rates, South Dakota ranked #1 with a rate of 3.2%.  Minnesota found itself ranked #31 with a rate of 5.9%. While Georgia ranked worse at #37 with a rate of 6.5%, Georgians may have something to look forward to very soon- more jobs in the airline industry.

When politicians begin to think about financial problems and declining revenue, some of them immediately think- "Raise taxes" as though that will solve the problem. As more and more companies shift jobs away from Minnesota, there will be fewer taxpayers at both a corporate and individual level. 

Minnesota must immediately reexamine its tax policies to ensure that our laws not only invite business expansion but encourage business retention. Our tax laws must also encourage compliance. We must examine issues like why there remains a large illegal alien population in Minnesota. Many of the people in this country and our state illegally work under the table so employers and workers avoid taxation. Taxpayer tolerance for tax avoiders will have one of two results: increasing anger towards those who do not pay and/or an increasing willingness of former taxpayers to become tax avoiders. Neither scenario bodes well for state coffers.

Governor Pawlenty has recently launched the "Green Jobs Investment Initiative" and now has toured the state promoting the plan. It is great to offer incentives for green jobs and we should all hope the program is an unquestionable success. While it is possible the program will lead to an increase in jobs in Minnesota, it would be a welcome surprise if the program served to "ignite job growth and investment" over the next several years. 

The truth is the state must focus on retaining as many jobs as possible, green or not green. As long as the DFL continues to ignore and even dispute the fact that MN's exceptionally high tax rates are a contributing factor to the state's increasing economic difficulty Pawlenty and Republican leaders must not retreat from demands for tax cuts.

We can not tax ourselves out of this situation and we can not borrow our way to a better economy. The Republican Party nationally, in Minnesota and across the country must reclaim the message and the behavior of past leaders. 

Fiscal responsibility and allegiance to our founding principles is the only place the leadership can start if they are to earn the respect they need to succeed.