Minnesota’s Economic News — W/E 1/28/22
State and local taxes and spending Minn Post: A new Minnesota law is saving certain kinds of businesses a boatload in federal income taxes Star Tribune: Minnesota lawmakers face $7.7B…
Recently, I had the pleasure of speaking to a local city council about the obstacles to the construction of affordable housing which state and local governments erect in terms of in terms of taxes, fees, and regulations. My remarks were largely based on an op ed I wrote for the Pioneer Press titled ‘Affordable housing is rare because it’s illegal to build‘.
One of the attendees made three points in defense of Minnesota’s high burden of taxes, fees, and regulations on housing.
First, he said that the weather is much colder in Minnesota than somewhere like Texas. This dictates very different housing so it it makes little sense to compare housing costs between the two.
This is true, but in my article and in my remarks I pointed out that
By nearly every measure, a new home in the Twin Cities costs more than those in every other comparable Midwest market. An average home in Lake Elmo, for example, would cost $47,000 less in Hudson, Wis., and a new home in the Twin Cities costs as much as $82,000 more than a similar home built by the same builder in the southwestern Chicago suburbs.
The weather is surely not so different in Lake Elmo as it is in Hudson, WI.
Second, he said that regulations in Minnesota requiring certain people to inspect the electrics in a new house meant that you couldn’t just get your buddy to do it, as you could in Wisconsin. Minnesota’s high burden of taxes, fees, and regulations on housing makes it safer, in other words.
I am not aware that folks in Wisconsin are keener on living in firetraps than folks in Minnesota. I asked the attendee what the data was on relative safety of housing in Minnesota and Wisconsin. He admitted he didn’t have any. Without that, how can we accurately weigh the benefits of the regulations against their costs?
Finally, he said that much of the regulatory burden was required to fight climate change.
I appreciated his candor. All too often, the same policymakers who are responsible for Minnesota’s high burden of taxes, fees, and regulations on housing will turn round and blame the “free market” for the resultant problems. They want to impose these burdens in the name of something like fighting climate change but pretend that there are no costs, and when costs arise “the free market” becomes the whipping boy.
All too rarely do our policymakers have the courage to admit that, when they impose regulations in the name of something like fighting climate change, they are sacrificing affordable housing in pursuit of that goal. There is no such things as free lunch, as a great man once said. If you want the benefits increased regulations bring you in terms of fighting climate change, you have to have the guts to acknowledge the costs. Unaffordable housing is a price they are willing to pay. Or, rather, a price they are willing for someone else to pay.
Not all policymakers are so lacking in backbone. In a recent op-ed for the Chaska Herald, Jim Weygand, a former Carver city councilor and vice chair of Carver County Democrats-SD47, writes
It is important to realize regulations have made our housing safer, healthier, friendlier to the environment and more expensive. It is important when discussing regulations to consider whether benefits outweigh the costs.
This is exactly the way to think about the issue.
John Phelan is an economist at the Center of the American Experiment.