Minnesota Could Lose LAWYERS!!! (Minneapolis, Dayton: sales, 2014, houses)

[Beenhere4ever]

The Star Tribune is showing its essential colors in coverage of the tax reform proposals of Dayton. Not sure I've seen one article about how it is a step towards fiscal balance. But their stridency goes over the top with something like this:

if the governor's proposal to expand the state sales tax to legal services becomes law, the Fish & Richardson office in Minnesota almost certainly will not be around much longer. Nothing special about the taxes of Fish & Richardson; it's one of many professional services firms running a national practice with people in Minnesota. This proposed tax changes the game for firms with that kind of profile.
Fish & Richardson is based in Boston with 369 lawyers, about 45 of whom are here. It's a go-to firm for patent and other intellectual property law for the likes of Google, Microsoft and Allergan.

Schafer: Professional firms won't stick around for new tax | StarTribune.com

Yep, the "threat" is a reduction of corporate lawyers in Minnesota. Booooo! I guess everyone knows we have a "shortage" of that. Dayton doesn't dare to scare them off. Even if it means cutting essential programs or loading more on the masses.

[xandrex]

With such a strong service- and knowledge-based economy, it's definitely scary to think Minnesota may see problems like various firms leaving or losing business. I'm already out of school, but currently have a guaranteed one-year position. Once that's up, I'll be looking for jobs in one of the industries that will face this new tax. I certainly wouldn't want that hindering my employment opportunities.

That said, I think this might be one area that is originally proposed but dropped.

We do have a structural tax problem in that we have moved from a production economy to a service/knowledge economy, but don't have the proper tax system to capture some of those benefits. I assume ideally we'd want to broaden the tax to services while lowering rates across the board. That is what Governor Dayton seems to be proposing, but of course we'd be on the only states with such taxes, which puts us at a competitive disadvantage.

[Globe199]

The tax problem is not just structural in terms of our economic model. It's a structural attitude problem. Ever since the "Reagan Revolution," the attitude in this country has been "I want all the benefits of taxation, but I want someone else to pay the taxes."

So here's what happens when somebody like Mark Dayton comes along and proposes sweeping changes that might work. You get a bunch of whiny business people kicking and screaming and threatening to take jobs out-of-state. None of these people feel the obligation to pay any taxes at all. The result is that, after decades of Republican abuse and neglect, you wind up with lower wager earners shouldering a larger portion of the taxes -- and those people simply have no power with lawmakers because they're unable to grease any palms.

As Dayton has rightly pointed out, there is no correlation between taxation and job growth. If that were the case, there should be jobs in South Dakota growing on trees. The reality is that Minnesota has an educated and skilled workforce. Companies are here to take advantage of that.

I say we call their bluff.

[Beenhere4ever]

How are companies going to deliver services remotely? Remote pedicures? Remote auto maintenance? I think they are going that route because of the need to be present in a state to operate. As opposed to Amazon which is only paying sales taxes where it has warehouses. They shipped so much manufacturing to Asia that it creates a massive revenue at every level of government. Frankly, if every state got the sales tax for taxable items bought by its residents, I don't think these changes would ever come up. But its a fact that state deficits aren't a rare thing. And even the highway taxes are being overcome by technology, forcing tax changes.

But really. Is corporate law the place to start in crying panic? I wish Shakespeare were here. He'd say "See, I told you!"

[Globe199]

You can sure as heck do some white collar services remotely, like accounting and computing.

[moving123456]

"I wouldn't vote for my budget myself" -Mark Dayton

Gov. Mark Dayton defends his 2014-15 budget | ABC NewspapersABC Newspapers

[Glenfield]

Originally Posted by Globe199

You can sure as heck do some white collar services remotely, like accounting and computing.

Absolutely. And the loss of high paying jobs like these lawyers' is going to mean a reduction in state income tax receipts that will outstrip any increase from higher rates. My company is looking at moving jobs to South Dakota and the number of people who have said, "Yes, I'll go" is surprising even me.

[Beenhere4ever]

Nice partial quote:

Gov. Mark Dayton is carrying that honesty banner these days when defending his 2014-15 budget that totals $38 billion. At this juncture, Dayton said, “I wouldn’t vote for my budget myself except that what’s the better alternative.”

[Globe199]

Originally Posted by Glenfield

Absolutely. And the loss of high paying jobs like these lawyers' is going to mean a reduction in state income tax receipts that will outstrip any increase from higher rates.

I don't know. I'm sure that has been factored into the budget proposal.

[xandrex]

Originally Posted by Beenhere4ever

How are companies going to deliver services remotely?

Some legal advice can be done remotely. PR/advertising/marketing work can be done remotely. Accounting can be done remotely. Programming and a lot of IT can be done remotely. Human resources can be done remotely. Consulting can be done remotely.

A lot of white collar jobs can be shipped out of state. Whether or not it's fair is not really the argument. These businesses probably should be charging taxes for these services, but they have leverage because they're high-income service/knowledge jobs.

Now do I think they'll move out of state? I doubt most of them will. Minneapolis is an epicenter of creative agencies, for instance. This isn't really because of the tax climate...it's because we have a community that values creative work and has built up businesses here. None of my friends doing graphic design are interested in living in Sioux Falls, for instance.