By Eric Harris Bernstein, Minnesota Reformer
For the second edition of Tax and Spend, I was planning to respond to yet another Star Tribune op-ed declaring that high taxes are ruining Minnesota. The author — former GOP attorney general candidate Jim Schultz — stopped short of describing Minnesota as “a barren hellscape” but still managed to invoke the idea on at least three occasions. So, I felt compelled to defend the honor of our state’s fiscal policy decisions.
Then the Timberwolves did it for me.
On Saturday, the Timberwolves continued their masterful playoff run with a tremendous Game 1 win on the road in Denver. What does that have to do with taxes?
Well, it just so happens that some of the state’s most vocal anti-tax conservatives have been arguing for years that Minnesota’s relatively higher tax rates impair the success of our sports franchises. Their theory — supported by two academic papers by Minneapolis Federal Reserve economist Erik Hembre — is that teams in higher-tax states win less because highly skilled free agents choose to play for franchises in lower-tax states.
This mirrors the conservative view on the economy at large: Just swap team success for economic strength, and star athletes for people and businesses considering where to live and invest. Conservatives have long assumed that higher taxes result in less inbound migration and business investment.
And sure, it would be foolish to deny that taxes impact some individual or corporate decision making. But anti-tax conservatives don’t just think that tax rates are influencing some workers and businesses; they believe that this is the dominant force determining our state’s economic conditions. And that’s why the Timberwolves’ breakout season is the perfect illustration of the absurdity of this world view.
Think for a second about everything that goes into a successful NBA team: Raw talent is only one part of a much bigger picture: You need the right combinations of skills, good coaching, team chemistry, great fans, and a vast network of staff holding it all together.
In our socioeconomic parallel, these are things like education, health care, and a clean environment that support a strong workforce, high quality of life, and flourishing communities.
In society, as in basketball, success comes from teamwork. Just ask the low-tax Phoenix Suns and their traveling basketball mercenary, Kevin Durant. Perhaps he should have considered paying higher taxes for a stronger defense and a point guard.
Unfortunately, the important dimensions of a well rounded franchise fall out of view when we glimpse the world through the narrow lens of the anti-tax conservative. Never mind the development of Anthony Edwards, the ingenious signing of undrafted Naz Reid, or the admirable resilience of Karl Anthony-Towns — if only we had lower taxes we would have a better team.
It almost sounds too silly to be true, but read the policy platform that inspired Jim Schultz’s op-ed, or listen to Republicans debating tax policy in the state Capitol and it’s clear: A single-minded aversion to taxes is the pinhole through which all-too-many conservatives view the economy, and even society at large.
Minnesota conservatives are so obsessed with what they imagine we don’t have, they seem unable to muster any awareness for the many incredible things we do. The country’s 6th-lowest poverty rate and 7th lowest unemployment rate; the 5th-highest labor force participation; a top 15 median income — the highest in the region. The 2nd highest homeownership rate; the 3rd longest life expectancy; and the lowest rate of death by heart disease.
These are the exact sort of fundamentals you want to build around. And indeed, in economics even more than athletics, Minnesota performs. We have had the strongest economy and highest quality of life in the Midwest for decades. Over the past year, business applications increased at the third-highest rate in the country, and we ranked consistently near the top of the Philadelphia Federal Reserve’s monthly Coincident Index, which compares state economic strength based on employment, manufacturing production, wages and overall growth.
No, we don’t match the rapid GDP growth of Florida or Texas. But is that really the most important goal we should be shooting for? The question applies in basketball as well.
For his paper on the relationship between income tax rates and franchise success, Hembre examined win percentages. Obviously this is a very reasonable metric for an academic study. But to torture the metaphor a bit, is maximizing total wins in a given season the ultimate goal of a basketball franchise?
Stability, longevity and consistency are equally important. The Timberwolves could have chased wins with impatient trades over the past couple years. But what we have now is much more precious: A cohesive, largely homegrown team with years of potential ahead. That’s what you get when you worry less about who’s coming in the door, and invest in the people who want to be there.
And then, of course, there is the ultimate goal of a sports franchise: Championships. This didn’t factor into Hembre’s analysis, but here are the home states of the franchises with the most NBA titles: California, Massachusetts, California, Illinois, Texas. Notice anything?
Each of these franchises are celebrated institutions with long traditions of strong management and a commitment to collective success. Most of them are also in relatively high-tax states. For players, joining a strong organization carries enormous upside, and that’s worth paying for.
Minnesotans feel the same: Although we attract fewer high-earning migrants than the warmer Sun Belt states, we also retain more of the ones we have. Because, despite the insistence of our more rabid anti-tax conservatives, life here is good and it’s looking up.
The Denver Nuggets are the defending champions and a very strong franchise. It will be a tough series. But I have been blown away by the Timberwolves’ poise and execution. It’s a true team effort and it’s glorious to behold.
I feel similarly about Minnesota’s long history of working to create a more egalitarian society. Not many other states invest in health care, poverty reduction, education or public infrastructure like we do, and it has made us an economic and quality-of-life standout across the country. There’s more work ahead, but this effort, like the Timberwolves, is something we can all be proud of.
For better or worse, there’s only one way to end this column: Wolves in four.
Minnesota Reformer is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Minnesota Reformer maintains editorial independence. Contact Editor J. Patrick Coolican for questions: info@minnesotareformer.com. Follow Minnesota Reformer on Facebook and Twitter.
