Saint Paul Pioneer Press, November 18, 2004

We were encouraged by the news this week that Minnesota added 7,700 jobs in October and the state unemployment rate fell to 4.3 percent from 4.6 percent in September. Unfortunately, a new study from the Pacific Research Institute and Forbes magazine questions whether Minnesota can keep those jobs.

The U.S. Economic Freedom Index scores states based on more than 100 variables, including regulatory, fiscal and judicial climates, the size of government and welfare spending. Overall, Minnesota ranked 44th, down from 43rd when the study was first done in 1999. Wisconsin faired slightly better, coming in at 38th, down from its previous ranking of 37th.

This, of course, is old news for Minnesotans and Wisconsinites who are constantly reminded that they're some of the most taxed people in the 50 states. But it's not all bad news, either. For instance, the study points out that Minnesota's per capita income of about $34,000 is seventh highest in the nation and about 10 percent above the national average. Wisconsin's was 21st highest at about $30,000. Between 1996 and 2002, per capita income in Minnesota grew by nearly 31 percent; in Wisconsin it grew by almost 29 percent.

In addition to the various rankings, the study makes the important point that needless regulation and confiscatory taxes unduly burden taxpayers and drive businesses away.

"Economic freedom expands the opportunities for individuals to use their knowledge and resource to their best advantage and to keep the fruits of their labor for personal consumption and future productive investment," the study says.

Using a complex econometric formula, the study notes that Minnesota's restrictions on economic freedom yield an "oppression tax" of about 3.06 percent, which on average reduces per capita income by $915 a year. In Wisconsin, the impact is about double at 6.06 percent, depressing annual per capita income by an estimated $1,600.

While we don't think this study should be a blueprint for legislators in Minnesota and Wisconsin to reform government, we think it should give them pause. Especially here in Minnesota, where we're headed into another biennium with much to do and not enough money to pay for it. How legislators figure out this budget math will determine whether the private sector keeps growing jobs, or if it decides to move to South Dakota.