Minnesota's Ideological and Economic Tipping Point

Friends and neighbors,

My next several newsletters will be a reflection on the current ideological and economic condition of Minnesota. My objective is to provide you with a realistic view of where we stand, so that we can work together for a prosperous future. 

Minnesota's Tipping Point

Minnesota has reached an ideological and economic tipping point.

Throughout our state's history, we have celebrated success, and entrepreneurs came here to build thriving businesses. Home to 17 Fortune 500 companies, our state is still reaping the economic rewards brought to us by the spirit of hard work and capitalism that we exemplified throughout the 20th century.

However, over the last decade, Minnesota has lost its way. As regular Minnesotans continued to go to work, raise families, and enjoy our great outdoors, the Democratic Socialists of America (DSA) have succeeded in using out-of-state funding to turn  Minneapolis and St. Paul into two of the preeminent strongholds of socialist ideology within the United States. For students of history, the results have been predictable: Anti-business policies and lawlessness have led to an exodus of industry and wealth.

If this trend continues, Minnesota will rapidly go insolvent. The good news is that there are more of us than there are of them. In order to save our state for future generations, it is time for regular Minnesotans like you and me to become more engaged than ever before.

Socialist Infiltration of the DFL

Currently, four out of the thirteen members of the Minneapolis City Council are associated with the DSA, as are two of the seven St. Paul City Council members. Their numbers within these Councils, and within the State Legislature, continue to pose a danger to the economic future of our state.

These leftist ideologues run for office under the "Democratic-Farmer-Labor (DFL)" label and continue to gain traction within the DFL. They have even succeeded in getting a DSA-endorsed candidate appointed as Chair of the House Taxes Committee. She has not had a job in the private sector, yet she holds considerable power over how much you have to pay the state government each year. 

As investment dries up and the wealthy leave, an increasing percentage of Minnesota's tax burden will fall on the rest of us to pay for. 

Below, I will outline the capital flight that has occurred due to DFL/DSA policies, and how this will ultimately impact you:

MSP Commercial Property Values in Free Fall

In a disturbing indication of where the DFL/DSA is taking our state, let's take a look at how the Twin Cities commercial property market is doing:

Ameriprise Center: Sold for $200 million in 2016. Sold for $6.25 million in 2025. 

Forum Office Towers: Sold for $73.7 million in 2019. Sold for $6.5 million in 2025.

Wells Fargo Center: Sold for $315 million in 2019. Sold for $85 million in 2024.

Kickernick Building: Sold for $19.5 million in 2017. Sold for $3.79 million in 2024.

Lumber Exchange Building: Sold for $24.3 million in 2019. Sold for $1 in 2026 (deed-in-lieu-of-foreclosure).

You read that correctly. This February, an office building in Minneapolis was so financially distressed that it was transferred for One. Single. United States Dollar... When someone can walk down the street in our state's largest city and choose between buying an entire commercial building, or an Arizona Iced Tea, we have a major problem.

Saint Paul has likewise seen its commercial property values plummet, but fortunately not to the same extent as Minneapolis.

Causes and Effect of Corporate Exodus

DFL/DSA politicians blame this exodus on work-from-home policies stemming from COVID-19. This certainly is a factor, but then why are cities like Nashville and Charleston booming, while Minneapolis and St. Paul are stalling out?

It is quite simple: Business favors low tax, low regulatory environments where conditions are predictable. When the DFL/DSA pass laws like Paid Family and Medical Leave, which allows employees to take up to 20 weeks per year off work, that's unpredictable. When they encourage rioting and looting in our streets, that's unpredictable. When they flippantly propose wealth taxes, income tax hikes, and other drastic measures like the quintupling of car tab fees, that's unpredictable.

DFL/DSA policies have forced companies out of the Twin Cities, and Minnesota is increasingly seen as an un-investable state. Why would a business owner subject themselves to the headwinds that the DFL/DSA create, when they could just as easily set up operations in the Dakotas, Iowa, or Wisconsin?

Decisions made by politicians in the Twin Cities are the real cause of the plummeting commercial values that we have seen. Lacking enough commercial property tax revenue to meet their budgets, counties have resorted to hiking residential property taxes on the middle class.

If you are reading my newsletter, you likely do not live in Hennepin County. However, Hennepin and Ramsey Counties carry major voting power at the State Legislature. When faced with deficits, DFL/DSA politicians do not hesitate to ask for state-level bailouts for their districts, which are then subsidized by the taxpayers of Greater Minnesota. In this way, the collapse of Minneapolis and St. Paul affects us all.

Minnesota Individuals are Taxed (to Death!)

It is not just corporations leaving. Here are a few DFL/DSA tax policies causing Minnesota's high-earners to fly south:

State Income Taxes: 9.85% for top earners is among the 10 highest state income tax rates in the nation. 

Capital Gains Taxes: 9.85% for top earners.

Property Taxes: Homeowners in wealthy enclaves, such as Lake Minnetonka, Edina, and White Bear Lake regularly pay more than $40,000 per year in property taxes. For the most expensive homes, these annual property tax rates are north of $300,000 per year!

Social Security Taxes: Can reach 9.85% for top earners. Minnesota is one of only eight states in the nation to tax Social Security.

Death taxes: Range between 13% and 16% for estates over $3 million. 

Proposed Wealth Tax: Would tax all ASSETS of over $10 million in value (businesses, homes, vehicles, art, etc.) at 1% per year. Will lead to mass litigation regarding valuations of unsold assets. It will also impact farmers, who hold valuable land assets, but don't necessarily have the annual cashflow to pay the tax.

***It is worth noting that Florida has a 0% tax rate for all of these categories, except for property taxes, which they are holding an upcoming referendum to eliminate.***

Individual Exits Could Cause Tax Doom Spiral

Common refrains given by DFL/DSA activists when confronted with these numbers are, "The rich can afford it!" or "Don't let the door hit you on the way out!" However, after the wealthy have fled, who is going to pay for the door? The answer is you and I.

Currently, the top 1% of earners in Minnesota contribute approximately 30% of our state's total annual income tax revenue, while the top 10% of earners contribute approximately 63% of that total. The bottom 90% of earners pay only 37% of our state's total income tax.

If you were a bank, you would think twice about issuing a loan to a business that gets 63% of its revenue from only 10% of its clients, especially if you knew that the business was treating that 10% poorly.

The math is simple: If the wealthy continue to leave, our state becomes insolvent.

And the wealthy are leaving. There is a reason that Naples, Florida, has received the nickname "Little Minnesota." So many Minnesota "expats" have established residency there, that they've practically colonized the city. It's hard to blame them, as DFL/DSA politicians have made it abundantly clear that they are not welcome here. Besides, this is not San Diego, where the tradeoff between high taxes and great weather is easier to justify.

If trends continue, it will be up to you and me to make up the extra 63%, on top of what we already pay. Facing this, the middle class will leave, and you can see how this situation could easily spiral out of control in a cycle of accelerated decline.

What Can We Do?

Despite all of these concerning metrics, I still hold great optimism for the future of Minnesota. Every day, I have the pleasure of meeting with hardworking constituents who keep me inspired.

As I stated earlier, there are fortunately still far more of us regular Minnesotans than there are DSA radicals. Most DFL voters do not identify as socialists, and there is a growing conflict within their party over its future. However, the determination of the DSA to fully subsume the DFL cannot be underestimated.

It is incumbent upon all of us to stand in the way of policies that would cause further economic degradation of our great state, and I want to encourage you to continue to stay vocal and involved. Thanks to your engagement, Republicans were able to win a tie in the Minnesota House, and that has been crucial for blocking a cascade of harmful tax bills proposed by the DFL/DSA. 

Let's keep our momentum going and fight for a prosperous future! 

Please contact me with any questions or priorities that you would like to share:

Email: rep.tom.murphy@house.mn.gov

Phone: 651-296-4946

Tom Murphy

MN State Representative District 9B

Proudly Serving Otter Tail and Douglas CountiesThanks

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