47 Jobs for $7 Million Misses the Point on MN Angel Tax Credit

Last week, the Minnesota Department of Employment and Economic Development (DEED) published a report showing that $28 million had been invested in emerging businesses since the state’s new Angel Tax Credit went into effect in July of last year. The report also shows that “only 47 new jobs” had been created by the companies that received investments.

Before anybody gets too wound up about a cost of almost $150,000 for each new job and before any opponents of the credit declare victory, let’s remember that the number of jobs created by companies receiving investments to date is completely irrelevant. The long-term impact of attracting new businesses to Minnesota (and keeping existing businesses in Minnesota) is what really matters.

Minnesota has for decades been known as one of the best places in the world to start and grow a medical device company. I’m pretty certain that, had Earl Bakken been convinced to locate his fledgling medical device company (a “little” business you may have heard of called Medtronic) somewhere else—maybe because of a really forward-looking angel tax credit in a neighboring state (decades before anyone actually dreamed of such thing)—this would not be the case. It is likely that the jobs created from a small tax credit way back then wouldn’t have amounted to much more than a hill of beans six months later. If you fast forward about 50 years, an entire industry, encompassing hundreds of thousands or even millions of jobs is, in part, the result of that early activity.

DEED is putting some emphasis into increasing participation levels for the credit in Greater Minnesota. These levels have been lower than anticipated so far and so this seems like a good idea. That, along with a handful of minor legislative fixes, is all the hand wringing we need at this point. Talk to me in a couple of decades and we’ll know whether the state got a good bang for its buck.