Minnesota ranked as one of the least free states in the country by two newly published studies

Last week, the Fraser Institute published its annual Economic Freedom of North America report. The new edition, which looks at data from 2021, ranked Minnesota among the least free states in the United States. specifically, Minnesota ranked number 43 among the 50 states. Minnesota performed worse than all its neighbors, of which two — South Dakota and North Dakota — were among the ten most free states. Iowa and Wisconsin ranked in the middle at number 23 and 27 respectively.

Of the three subnational components that the report looks at, government spending, taxes, and labor market freedom, Minnesota performed especially poorly on taxes, ranking at the bottom among the 50 states. This shouldn’t be that surprising considering our high levels of taxation, which are especially made worse by the fact that our high marginal tax rates start at relatively low levels of income compared to other high-tax states — a factor that the report takes into account.

Minnesota has consistently ranked low on freedom

It may be possible to argue that study methodologies can affect these kinds of rankings. However, Minnesota’s rankings are consistent both across time and across studies conducted by different types of organizations. Looking at data from Fraser going back to as far as 1981, Minnesota has consistently performed worse than average.

In a study that the Cato Institute published yesterday, called Freedom in the 50 States, Minnesota ranked 41st among the 50 states. This is the same ranking that Minnesota held last year. Much like Fraser’s report, Minnesota also performed especially poorly on taxation, ranking number 47 among the 50 states.

Why this matters

Studies consistently show that freedom is crucial to growth. High levels of economic freedom encourage investment and entrepreneurship, leading to high levels of income and growth.

It should be concerning, therefore, that Minnesota continues to consistently perform poorly on these studies. It should be even more alarming that these rankings do not yet reflect the damaging tax hikes, and other policies, that were enacted in this year’s legislative session, which are likely to worsen Minnesota’s standing.

As American Experiment’s research has already shown, while Minnesota is a high-income state, it has persistently lagged most states when it comes to growth. If our state is to catch up, lawmakers need to enact policies that would make Minnesota more competitive. That would mean, among other things, lowering taxes and loosening regulations, reforms that would make our state more conducive to investment and entrepreneurship.