The Brookings Institution found that natural attractions such as walkable waterfronts offered the most consistent improvement in both quality of life and the business climate. Pictured here: Bde Maka Ska, Uptown Minneapolis. Photo by Mike Krivit Photography, courtesy Meet Minneapolis.
We recently got our annual reminder to argue about “tax flight” — the assertion that Minnesota’s relatively higher taxes are causing the state to lose population and wealth. The latest attempt by Andy Brehm in the Star Tribune is more reasonable than last year’s epic Minnesota goodbye from Howard Root, but the logical response is much the same: People leaving Minnesota is a serious concern, but tax cuts won’t reverse the trend.
With tax havens abounding both near and far, Minnesota will never win a misguided race to the bottom on taxes; like it or not, the state’s future depends on our ability to create value by putting our dollars to work.
Objectively, there is already substantial evidence that Minnesota’s public investments pay off handsomely: Strong public education has long shaped a powerful workforce and diverse economy with higher wages and lower unemployment than most states; a robust safety net has granted us some of the lowest poverty, highest labor force participation, and longest life expectancy in the nation. And, importantly, we don’t actually spend that much more money. Despite higher taxes, Minnesotans pay less in fines and fees for public service. When it all nets out, we rank 17th in state-generated spending as a share of the economy.
From a value standpoint, Minnesotans should feel good. But that doesn’t matter if they don’t.
Domestic migration matters because people wanting to move here and stay here are important signals of our success, and the creation of a prosperous society is made vastly easier with reliable growth.
So, while the latest IRS numbers showing net migration to the Sun Belt shouldn’t cause policymakers to panic, they do emphasize the need for Minnesota’s robust public investment to reach people in a manner they recognize and appreciate.
This might prove less straightforward than one would hope.
Polling shows that Minnesotans, like Americans in general, are unhappy with the country’s direction and particularly concerned with the affordability of daily life. In theory, this should play to our advantage: Minneapolis-St. Paul-Bloomington has had one of the lowest inflation rates of any metro area in the country for over two years, and Minnesotans consistently report some of the lowest levels of financial stress in the Census Bureau’s monthly Pulse Survey. But so far this has translated neither to an influx of new Minnesotans, nor a sharp rise in retention.
Some of the issue might be time lag: The newest migration numbers are two years behind, and thus do not reflect the impact of Minnesota’s recent spate of reforms, from increased school funding to new protections for trans rights and reproductive health care. It’s possible these policies, and Minnesota’s renewed progressive reputation, could be attracting newcomers or retaining more current residents as we speak.
But policymakers shouldn’t wait around to find out.
In an increasingly anti-tax environment, Minnesota state and local governments must be creative and entrepreneurial in identifying policies and projects that could create more widely felt benefits, and more magnetic communities.
One approach would be to think bolder. Minnesota could set out to be the first state to eradicate unsheltered homelessness; establish a universal right to higher education; or pilot a new approach to public safety. Ambitious initiatives like these could help strengthen our shared identity as the state that cares and solves problems; an antithesis to the dog-eat-dog culture of so many Sun Belt states.
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People must also be able to explain what they are getting in return for their taxes. In 2023, the state’s new universal school meal policy was a shining example of a simple, understandable, popular public program. But out of $17 billion and many smart long-term investments, it was one of a precious few policies to capture the public’s attention . Thinking of how to deliver broad, effective, tangible benefits is another important strategy.
One more idea is to think local. In a study of factors contributing to economic success , the Brookings Institution found that natural attractions such as walkable waterfronts offered the most consistent improvement in both quality of life and the business climate. Investing in parks and public amenities won’t fix deep inequities in public schools or health care system, but in the meantime they might cost less and deliver more readily identifiable public benefit.
Regardless of the strategy, Minnesota will have to lead actively.
With warm weather, and a laissez-faire attitude about human welfare, the states gaining big on population right now have it easy. Creating opportunity is harder than surrendering to runaway inequality, just as building successful institutions is much more difficult than dismantling them.
Harder still will be wrestling with a legacy of structural racism. Minnesota’s history of prosperity was a triumph of community action and collective problem solving. But it was a utopian dream available mostly to white people. As the state grows more diverse, the challenge before us is to create a society that is equally prosperous and cohesive, but across all racial groups. Admirable as leftists like me find the Scandinavian model of high taxes and high public investment, those countries are doing it for a mostly homogenous culture. Our task is harder.
We also need to get more for every dollar we spend. If Minnesota wants to succeed, it needs to be the state with the best — not just the most expensive — public services. There is an important role here for Republicans, if they can get on the side of reform rather than resentment. Investigating fraud and streamlining concurrent programs would be a good start; examining the oft-neglected base budget of state agencies would be another.
But to engage in good faith, the GOP would first have to admit to itself that there is no path by which Minnesota will become Florida, and that it would hurt us to try. Take away our relatively strong public institutions and we would be really screwed. Not so much cold Texas, but colder Nebraska. No thanks.
The challenge facing Minnesota is substantial. Amidst a national race to the bottom, we are one of a few states striving to build a more functional and caring society; a true multiracial democracy. And without the intrinsic pull of oceans, mountains, or a warm climate, we will always face an uphill climb.
But that is also an inspiring opportunity: People will come here and stay here for the quality of the society we create. That’s something we could all be proud of.
What would you like to see your tax dollars go to? Email taxandspend.reformer@gmail.com and we’ll share the good ideas.
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