Minnesota, we have a problem

As taxes skyrocket, quality of life plummets.

Back in 2015, President Obama compared Minnesota favorably with Wisconsin, holding up our state’s high, progressive taxes as the model for others to follow.

When I joined the Center in 2017, we were skeptical of this. The previous year, my colleague Peter Nelson produced a report showing that Minnesota was losing residents to, and failing to attract them from, other states. Our annual report on Minnesota’s economy that year called its performance “lackluster,” noting below average GDP growth. These weren’t popular arguments at that time.

That skepticism is now much more widely shared. In March, Steve Grove, commissioner of Minnesota’s Department of Employment and Economic Development, tweeted in celebration of our state being ranked the 2nd best to live in by U.S. News. He was roasted by progressives highlighting Minnesota’s racial disparities and forced to issue a groveling clarification.

In May, the Star Tribune embraced a report from the Minnesota Chamber of Commerce which highlighted, among other things, our state’s below average GDP growth and “lack of in-migration from other states” — sound familiar?

And a recent poll for our magazine, Thinking Minnesota, found that, while 45 percent of Minnesotans think our state is on the right track, 48 percent of us now believe it is on the wrong track; this is up from 38 percent in March 2019 and 26 percent in March 2018.

A new consensus is emerging as progressives join conservatives in perceiving that all is not well in the state of Minnesota.

Consider those racial disparities. Prof. Samuel L. Myers, Jr. of the University of Minnesota recently listed disparities in graduation rates, homeownership rates, loan denial rates, mortality rates, suspension rates, wage and salary incomes, unemployment rates, child abuse and neglect report rates, traffic stops and even drowning rates. Prof. Myers noted that: “The coexistence in Minnesota of wealth and plenty for the majority group with wide racial gaps faced by minority groups has come to be known as the Minnesota Paradox.”

It gets worse. For black Minnesotans some of these outcomes, like home ownership rates, are
not just low relative to those for white Minnesotans, but relative to those for black residents of other states. My colleague Catrin Wigfall noted recently that black and Hispanic students in Mississippi outperformed Minnesota’s black and Hispanic students in both math and reading, and that tests scores for Mississippi’s black students have been rising in recent years, compared to declining scores of our state’s black students.

And these disparities coexist with Minnesota’s high, progressive taxes. In 1997, 1999, and 2003, the Minnesota Center for Fiscal Excellence (then the Minnesota Taxpayers Association) said: “Minnesota’s income tax system is significantly more progressive than the average state income tax system.” Our state’s tax system ranked among the five most progressive in the United States in 2006, among the top six in 2008, 2010 and 2013, among the top two in 2014, and among the top five in 2018. Minnesota has had some of the highest tax rates and one of the most progressive income tax systems in the United States for decades.

The data show that whatever problems you think afflict our state at present — from racial disparities to surging violent crime — they have either arisen while Minnesota has had high, progressive taxes or they have proved resilient to remedy by high, progressive taxes. It is time to try something different. But what?

Look again at those education disparities. Last year, Brightbeam, a nonprofit education advocacy organization, released a report that found that some U.S. cities are doing a much better job at closing the gaps in education outcomes than others.

But, as Nekima Levy Armstrong wrote in the Star Tribune, “The brightbeam report shows that progressive cities like Minneapolis do worse — and, surprisingly, conservative cities do better — when it comes to educating students of color. According to the report, conservative cities have gaps in math and reading that are on average 15 and 13 percentage points smaller than those in progressive cities.”

This is not because conservative cities have higher and more progressive taxes than progressive ones. Something besides taxing and spending is closing those gaps. Rather than repeating or amplifying what has failed over decades in Minnesota, we should look to the places which are succeeding and learn from them.

This message was a hard sell four years ago. But with the emergence of this new, more skeptical consensus across Minnesota’s political spectrum, its time might have come.

A version of this op ed appeared in the Star Tribune on 12 July, 2021.