Minneapolis - St. Paul Business News

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mattaudio
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Re: Minneapolis - St. Paul Business News

Postby mattaudio » April 29th, 2016, 11:28 am

I don't know what the psychological term would be, but I think there's an "awareness bias" in the media and in general regarding companies lost versus companies gained. I'm sure there are plenty of other cities out there who are still bitter about losing a pillar of their local economy to a Minneapolis company via merger with UHG or 3M or the rest. But those are items that stay on the business page rather than the front page, since they don't have the same type of "real human impact" in our market.

On the flip side, look at all of our F500s that have won out in recent mergers. NCE+NSP became Xcel (Minneapolis over Denver), LB+AAL became Thrivent (Minneapolis over Appleton) are just two examples of "mergers of equals" that stayed in MSP. That's not counting all the other buyouts - look at all the multi billion dollar UHG or 3M acquisitions. All I'm saying is that we notice the bad more than we notice the good. The bad is still bad, but it's not necessarily a bellwether.

MNdible
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Re: Minneapolis - St. Paul Business News

Postby MNdible » April 29th, 2016, 11:29 am

mnmike wrote:If you are happy with other companies acquiring MN companies and taking the HQ to places where it is cheaper...then there is no problem.
My point is that you haven't provided any evidence whatsoever that cost is even on the top five list of factors influencing a decision like this. In every case that you site, there are a whole slew of other reasons that impact a decision like this.

Norwest bought Wells Fargo, moved HQ to San Francisco. Do you really think SF is cheaper than MSP?

Delta bought Northwest. Delta had a much larger HQ operation, and it's located next door to the busiest airport in the world.

Abbott Labs, a $54b company, overpays for SJM at $25b. Where do you think the HQ is likely to end up?

There are so many other, more important factors at play in these types of decisions.

mnmike
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Re: Minneapolis - St. Paul Business News

Postby mnmike » April 29th, 2016, 11:30 am

Didier wrote:The company "left" because another company bought it, not because Minnesota taxes are crippling compared to those in Illinois.

Ugh. Yes, exactly, and chose to not make MN the HQ. If we were more competitive with the tax rates, they may have chosen to make Minneapolis the HQ. A MN company buying another or being the dominant one in a merger, and still moving the HQ has happened too often. I can hardly think of an example where the reverse has happened, though there are some I think. Maybe US Bank?
Last edited by mnmike on April 29th, 2016, 11:32 am, edited 1 time in total.

KML_1981
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Re: Minneapolis - St. Paul Business News

Postby KML_1981 » April 29th, 2016, 11:31 am

mnmike wrote:Again, I never said it was a main reason for companies leaving. I think my two posts have been pretty clear. It is a reason for companies not staying. If you are happy with other companies acquiring MN companies and taking the HQ to places where it is cheaper...then there is no problem. No, it isn't likely a company is going to just up and move without being purchased or merging.

Also, you just further illustrated the point from my first post...sweethart deals do indeed count, because sadly, it still happens. If we don't want to play the game, fine...but there are consequences. I wish we didn't have to.

Basically you are going over all the points of my first post. "well, but they just left because of A, B and C and it wasn't that bad"...and putting all sorts of qualifiers on it. The hard truth is, losing fortune 500 HQs is losing fortune 500 HQs.
Illinois' business climate is not "better" than Minnesota's and that's the company that bought St. Jude. These are just normal mergers and acquisitions that happen in the course of business. The inversions can be attributed to the idiotic tax and regulatory structure at the federal level.

Companies come and go, merge, and go belly-up. That is a given. What we need to worry about is what companies are coming up that can take some of their places.. It seems there is a legitimate worry that our heyday was in the past and as the companies age we are losing them to normal market forces. What companies will be able to take their place? What will the philanthropy of the Twin Cities and Minnesota look like in 50 years?

mnmike
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Re: Minneapolis - St. Paul Business News

Postby mnmike » April 29th, 2016, 11:37 am

Alright guys, nevermind. Everything is great! I hope you are correct and we continue to maintain a large presence of fortune 500 companies, and up and coming ones that stick around. That has been my whole point...we have seen a lot of companies going...we can just say, "we are great, it is fine, it happens, they are keeping a lot of jobs here, it's just business"....or we can see if there is something we are not doing to keep them and stay competitive. If we just say "everything is great" and defend MN to the death, well that doesn't really bring in any ideas. There are many things to look at, and I really think the corporate tax rate is ONE of them...I mean it is twice as high as a lot of places, even more than 1% higher than CA, and almost 3% higher than NY. We have the 3rd highest.

I think it is worth looking at rather than just dismissing and attacking anyone that suggests it is possible that it is one reason we may be losing a bit, or maybe we are doing something else wrong. My whole point, and I am on "your side" by the way, is that we should look at it and make sure we are remaining competitive before it becomes a problem. Maybe we are doing everything right...won't know if we don't question it.

Corporate taxes were just one of the first things that came to mind. Is there something else we could be doing to remain more competitive? Or are we still doing well in retaining companies compared to our peers? I mean, the grass is always greener...

MNdible
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Re: Minneapolis - St. Paul Business News

Postby MNdible » April 29th, 2016, 12:17 pm

I'm not suggesting we shouldn't worry, just that our corporate tax rate probably isn't at the top of the list of things we should be worried about. There's a lot of nuance to these situations that tends to get ignored. There was a study somewhere that pointed out that the single strongest predictor of a HQ location was where the CEO's house was.

I'm not a tax expert, but I understand that there are a number of things built into MN's corporate tax structure that make it much more attractive than a quick glance at the top line rates might suggest.

In any case, I'm all for reviewing our overall tax structure, and perhaps lowering the corporate tax rate since it's generally considered to be a pretty regressive tax.

mnmike
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Re: Minneapolis - St. Paul Business News

Postby mnmike » April 29th, 2016, 12:33 pm

CEO's like to avoid taxes. And I am not saying it isn't gross to avoid taxes. The guy in this article kept his small company in MN though! It is just on a somewhat related note.

http://tcbmag.com/Industries/Politics-P ... -Migration

And I can agree that the corporate tax rate may not be on the top of the list...just what popped to mind first. I honestly do not know.

VAStationDude
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Re: Minneapolis - St. Paul Business News

Postby VAStationDude » April 29th, 2016, 2:11 pm

The survey referenced in the article asked loaded questions of a group of very conservative people whose livings depend on advising the ultra wealthy. Completely worthless. Of course the plutocrat fluffers in the business press lapped it up. Never mind that income tax revenues ran over projections for state fiscal year 2014/2015 and are also over projections for the current two year period despite a slow down in global economic activity. Also note that non wage income, what ultra high wealthy individuals derive a bulk of their income from, outpaced projections. Concrete facts refute the survey and center for the American experiment's study.

mulad
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Re: Minneapolis - St. Paul Business News

Postby mulad » April 29th, 2016, 2:13 pm

Minnesota as a whole pays a lot of federal taxes, though I don't really know why. I don't believe we're all that exceptional at the state level, though I haven't investigated that very heavily.

Someone from DC recently pointed out how the district pays more federal taxes than 22 other states, despite a very low population. Our state is ranked 21st for population, but we are ranked 10th in total tax dollars sent to the IRS, and rank 3rd on a per-capita basis (after DC and Delaware, which is of course where many companies are headquartered on paper -- and Minnesota is a much bigger state than either of those places).

http://dcist.com/2016/04/infuriating_ta ... e_time.php
https://docs.google.com/spreadsheets/d/ ... edit#gid=0

I suspect that has a lot to do with the amount of business activity in the state and not necessarily personal income, but it isn't clear. There are a lot of companies that have large numbers of workers here, yet have their HQs in other places. My current company is headquartered in Seattle (St. Paul is the biggest site), my previous one was in the SF Bay area (St. Paul was the biggest site until an acquisition).

amiller92
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Re: Minneapolis - St. Paul Business News

Postby amiller92 » April 29th, 2016, 2:15 pm

mnmike wrote: I think we will see this trend continue.
What's the "trend?" Because I'd wager that Minnesota companies do more acquiring than being acquired (primarily because companies like Medtronic and 3M buy lots of smaller companies).

amiller92
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Re: Minneapolis - St. Paul Business News

Postby amiller92 » April 29th, 2016, 2:21 pm

mnmike wrote: A MN company buying another or being the dominant one in a merger, and still moving the HQ has happened too often.
Aside from Medtronic's inversion, which didn't really move any actual people, and Norwest/Wells Fargo, I can't think of any. What do you have in mind?

This stuff typically just comes down to who is buying whom.

mnmike
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Re: Minneapolis - St. Paul Business News

Postby mnmike » April 29th, 2016, 2:24 pm

mnmike wrote: we can just say, "we are great, it is fine, it happens, they are keeping a lot of jobs here, it's just business"....or we can see if there is something we are not doing to keep them and stay competitive. If we just say "everything is great" and defend MN to the death, well that doesn't really bring in any ideas. There are many things to look at, and I really think the corporate tax rate is ONE of them...I mean it is twice as high as a lot of places, even more than 1% higher than CA, and almost 3% higher than NY. We have the 3rd highest.

I think it is worth looking at rather than just dismissing and attacking anyone that suggests it is possible that it is one reason we may be losing a bit, or maybe we are doing something else wrong. My whole point, and I am on "your side" by the way, is that we should look at it and make sure we are remaining competitive before it becomes a problem. Maybe we are doing everything right...won't know if we don't question it.

Corporate taxes were just one of the first things that came to mind. Is there something else we could be doing to remain more competitive? Or are we still doing well in retaining companies compared to our peers? I mean, the grass is always greener...
I will just quote myself again to respond to the last posts...because they are all just what I was referring to. Why are we blindly saying there couldn't be any reason at the state level that our fortune 500 count continues to decrease, instead of questioning whether we are doing things right? That's all. Sorry I brought it up! Continue on with your reasoning and justifying every time a company leaves...instead of stopping to think if it is something we should worry about...or if there is something we aren't doing to improve the business climate.

We are still doing pretty well on our number of large companies and the health of our economy....I just hope it stays that way! Nothing wrong with being concerned and questioning.

LakeCharles
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Re: Minneapolis - St. Paul Business News

Postby LakeCharles » April 29th, 2016, 2:55 pm

mnmike is your suggestion that these companies put themselves up for sale, so to speak, because they didn't like the taxes? Like St. Jude tried to get someone to buy them so that they could be taxed in Illinois instead? Or that Traveler's moved so they could pay NYC taxes instead of MN? Are NYC taxes noticeably lower than MN?

amiller92
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Re: Minneapolis - St. Paul Business News

Postby amiller92 » April 29th, 2016, 2:58 pm

There are all kinds of things that we could do to make acquiring a Minnesota company more difficult, but (1) businesses hate them, (2) they just encourage companies to organize under the law of a different state (actually, I tend to be surprised that more "Minnesota" companies aren't legally Delaware companies), and (3) Minnesota law already has broader appraisal rights than some. But hey, maybe we could have our own version of the Investment Canada Act to try to prohibit acquisitions that would cost Minnesota jobs (which would probably be unconstitutional).

But overall, it looks like we're going to lose one F500 HQ this year with St. Jude, and a second just off the list with Valspar. That blows, but doesn't really look like a trend when you consider that the rest of the transactions we are talking about years, if not decades, ago.

Meanwhile, Securian and Polaris aren't too far away from F500 and could join the list soon.

mnmike
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Re: Minneapolis - St. Paul Business News

Postby mnmike » April 29th, 2016, 3:03 pm

LakeCharles wrote:mnmike is your suggestion that these companies put themselves up for sale, so to speak, because they didn't like the taxes? Like St. Jude tried to get someone to buy them so that they could be taxed in Illinois instead? Or that Traveler's moved so they could pay NYC taxes instead of MN? Are NYC taxes noticeably lower than MN?
No, I can only repeat what my point is so many times. I even re-posted my post. No, that is not what I am suggesting. I was questioning how attractive our business climate is compared to elsewhere, and whether that has had an effect on companies no retaining their HQ here.
Last edited by mnmike on April 29th, 2016, 3:06 pm, edited 1 time in total.

mnmike
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Re: Minneapolis - St. Paul Business News

Postby mnmike » April 29th, 2016, 3:05 pm

amiller92 wrote:There are all kinds of things that we could do to make acquiring a Minnesota company more difficult, but (1) businesses hate them, (2) they just encourage companies to organize under the law of a different state (actually, I tend to be surprised that more "Minnesota" companies aren't legally Delaware companies), and (3) Minnesota law already has broader appraisal rights than some. But hey, maybe we could have our own version of the Investment Canada Act to try to prohibit acquisitions that would cost Minnesota jobs (which would probably be unconstitutional).

But overall, it looks like we're going to lose one F500 HQ this year with St. Jude, and a second just off the list with Valspar. That blows, but doesn't really look like a trend when you consider that the rest of the transactions we are talking about years, if not decades, ago.

Meanwhile, Securian and Polaris aren't too far away from F500 and could join the list soon.
Very good points!

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Tiller
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Re: Minneapolis - St. Paul Business News

Postby Tiller » April 29th, 2016, 3:27 pm

Tiller wrote:http://www.theatlantic.com/business/arc ... ge/417372/

A very relevant article about this phenomenon.
If you haven't yet, I'd recommend reading this article mnmike. This issue of corporate consolidation is an example of the local effects of economic inequality. Minnesota may be a net benefactor of economic inequality (we're far up the economic value chain), but that value isn't shared by everyone, with many still being worse off. That, in addition to the "awareness bias" Matt mentioned, is probably why we view this as an issue (which it is). Our massive racial disparities are one example of how everyone doesn't get a slice.

It's also not guaranteed that we'll continue benefiting from said inequality if it continues to worsen. I vaguely recall hearing that entrepreneurial/small business starts in MN have declined. That could be bad if it's a sustained trend, particularly once it works its way through the pipeline, and less companies start filling in for past/failing ones, sometime in the future.

My solutions for that would be to streamline (and somewhat increase) our welfare state, with its two primary pillars being an unconditional Universal Basic Income and a Single-payer Healthcare system. A simple and reliable safety net would increase business starts by minimizing entrepreneurial risk.

While the latter has a better-developed support base, It's probably completely infeasible politically at our state level because UHG is headquartered here. So I guess MN would have to focus on the latter unless there's a way to make Single-payer a positive for UHG, or a way to block UHG out of the process. (I'm not sure to what degree our non-insurance Healthcare companies would support/oppose Single-payer).

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Re: Minneapolis - St. Paul Business News

Postby Mcgizz » April 30th, 2016, 12:59 pm

MNdible wrote:Please point to a single big company that left Minnesota because of our corporate tax structure.
Medtronic specifically cited taxes as the reason for moving their corporate headquarters to Ireland.

While that was more about not paying federal rates for repatriation of some $13-14 billion dollars, they did cite taxes.

Also it may be hard to prove the point that MN taxes are a or the reason a company wants to shift jobs or headquarters. They might never say that is the reason because they don't want to be viewed as greedy. Corporations do have to worry about their public perception.

This St. Jude merger genuinely seems like a consolidation for saving money of duplicative costs and increasing their product portfolio.

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Re: Minneapolis - St. Paul Business News

Postby Didier » May 3rd, 2016, 2:19 pm


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Anondson
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Re: Minneapolis - St. Paul Business News

Postby Anondson » May 3rd, 2016, 3:24 pm

Time for Hopkins to get a plan together for the SuperValu mega blocks?


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