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ADM considers high-tax Minnesota

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* Just days after Gov. Pat Quinn announced he would veto any tax break for Archer Daniels Midland until pension reform is a done deal, the Decatur-based company sent emissaries to Minnesota…

A site selection team for Archer Daniels Midland was in St. Paul Monday, meeting with representatives of GreaterMSP, according to a source with knowledge of the situation who declined to be named. The meeting is being held at GreaterMSP’s headquarters in St. Paul’s Securian Building.

By sending representatives to the Twin Cities, the agricultural giant is at least confirming the Twin Cities as a potential relocation choice. ADM said last month that it wanted to move its headquarters and some technology jobs out of Decatur, Ill.

ADM was founded in that state over 100 years ago.

* While it would not be good to lose the company’s new world headquarters and tech sites, it might also make me chuckle a bit. Why? Well, Minnesota just raised a bevy of tax rates. From a May 21st story...

The tax bill creates a new income tax rate for top earners at 9.85 percent, 2 percentage points above the prior top rate, to generate $1.1 billion for the fiscal 2014-2015 biennium that begins July 1, according to a bill summary from House Democrats.

The top income tax rate applies to income over $250,000 for married couples and $150,000 for single filers. It will give Minnesota the fourth highest top state tax rate in the nation and apply to about 54,400 residents. […]

Minnesota also is closing some corporate tax loopholes to gain $400 million for the new budget, and the sales tax base is expanding to some select non-consumer transactions.

Since ADM is looking to locate some high-paying exec and tech jobs, most if not all of those positions would most likely be impacted by that much higher income tax rate.

* Minnesota’s corporate income tax rate, by the way, is a whopping 9.8 percent.

The state ranked 45th on the Tax Foundation’s 2013 State Business Tax Climate Index. Illinois ranked 29th.

So if ADM does move to Minnesota, Illinois’ tax rates could not possibly be blamed, which would probably make the Illinois Policy Institute’s collective head explode, and that alone would be almost worth it.

posted by Rich Miller
Tuesday, Oct 8, 13 @ 10:29 am

Comments

“Emergency squads were sent to the offices of the IPI where they found quite a gruesome scene today.”

What, Minnesota? Hope they like winter and paying more taxes.

Comment by Nearly Normal Tuesday, Oct 8, 13 @ 10:36 am
(Per my friend with more than 5 million square feet of industrial space) Industrial developers and relocating companies are now adding a new element in their site-selection matrix.

In addition to tax benefits, worker quality, quality of life - firms are actively researching the fiscal condition of both the state and municipalities in which they might be locating.

These firms are now worried about future tax burdens being imposed in communities and states with fiscal challenges.

I’m not saying it’s driving every decision, but it’s certainly becoming a larger driver for the decision makers.

Comment by Downstate Tuesday, Oct 8, 13 @ 10:38 am
Minnesota? Brrr!!! That should be a popular move for top executives.

Comment by downstate commissioner Tuesday, Oct 8, 13 @ 10:39 am
What about property taxes, vehicle taxes, sales taxes, fuel taxes, service taxes, airport taxes, payroll taxes, communication taxes, utility taxes, emergency service taxes, tolls, etc?

I would think those would come also into play in making any type of re-location decision.

The corporate / income tax rate is important, but does not exist in a vacuum.

Comment by Re-Pete Tuesday, Oct 8, 13 @ 10:44 am
Let’s think about this. It can’t be the weather. It can’t be the taxes. My guess is that it’s about infrastructure and education, two factors that certainly don’t favor Illinois anymore!

Comment by Old and In The Way Tuesday, Oct 8, 13 @ 10:45 am
IL Corp rates are never to blame because must big corps evade state taxes with federal loopholes and offshoring “strategies”
Someone must have a nice fishing lodge in the land of a 1,000 Lakes

Comment by CircularFiringSquad Tuesday, Oct 8, 13 @ 10:47 am
Re-Pete
Give it up. All of those are just as high or higher in Minnesota. It’s more complicated than TAXES! Sometimes it’s things you can’t change like geography. Sometimes it’s things that take years to change like education. Whatever it is it is not simple and in this case it’s not taxes.

Comment by Old and In The Way Tuesday, Oct 8, 13 @ 10:49 am
Just another reminder that if you make over $100k per year, income taxes are higher in all of Illinois’ neighboring states except Indiana–and if you live near Indianapolis, after you consider the county income tax it’s higher there, too.

And no, higher sales tax rates don’t come close to offsetting the difference.

Comment by Kwark Tuesday, Oct 8, 13 @ 10:52 am
This tax incentive dance companies do with the government is legalized blackmail.

Comment by Demoralized Tuesday, Oct 8, 13 @ 10:54 am
Have any of these people tried to find a decent meal in the Twin Cities?

Comment by Chavez-respecting Obamist Tuesday, Oct 8, 13 @ 10:58 am
Yeesh - them’s some seriously high taxes in the loon state. Maybe the execs just like snow.

Comment by Chicago Cynic Tuesday, Oct 8, 13 @ 11:01 am
Chavez,
“Have any of these people tried to find a decent meal in the Twin Cities?”

As compared to Decatur?
That may be a criteria, but if it’s the lead criteria, then Kankakee is in the running!

Comment by Downstate Tuesday, Oct 8, 13 @ 11:02 am
If ADM moves to Minnesota , it might be because they are going to get a special deal. A company that worked closely with the Soviet Union has a long history of high ethics!

Comment by Steve Tuesday, Oct 8, 13 @ 11:02 am
Well climate change is supposedly moving the Corn Belt north.

Comment by hisgirlfriday Tuesday, Oct 8, 13 @ 11:08 am
Any good CEO will ask because it is a win-win. ADM knows what they asked for is not a deal breaker. It’s very much in line and they will get
it unless the State manages to muck it up.
Call it what ever you want any State would love to have them.
Listen to what Quinn said fix pensions and they get the deal.

Comment by Mokenavince Tuesday, Oct 8, 13 @ 11:08 am
If the not-Illinois sentiment makes Minnesota attractive then we are all in trouble.

Comment by Bobby Hill Tuesday, Oct 8, 13 @ 11:09 am
Once again(for the ideologically deaf): big companies almost never consider state taxes among the top reasons for moving or staying.

We will be competing on other bases.

Comment by walkinfool Tuesday, Oct 8, 13 @ 11:10 am
Like Steve, I have to wonder if ADM isn’t being offered some really huge break from those high MN tax rates. Plus, the company was actually founded there and had its headquarters there until the late 1960s when it moved to Decatur so there is some historical connection as well.

Another factor, alluded to by Downstate, could be stability. If MN just recently raised a bunch of taxes and is relatively fiscally stable, chances are taxes won’t go up again for quite some time. We may have low taxes right now but uncertainty about how much they will increase and when is what’s killing business here.

Comment by Secret Square Tuesday, Oct 8, 13 @ 11:12 am
Minnesota is probably being considered for what it does not have: Quinn, Madigan, Chicago, Rahm, collar counties, etc….

Comment by TCA Tuesday, Oct 8, 13 @ 11:15 am
“Have any of these people tried to find a decent meal in the Twin Cities?”

Have you in the past 10 years? A dozen years ago, I would have completely agreed. It’s gotten a *lot* better.

Here’s my question:

Part of the supposed point of the move is better airport access for traveling execs and visitors. In either CHI or MSP, they’ll obviously use company aircraft for a lot of domestic travel, but MSPs international non-stop options (except Canada) *suck* in comparison to ORD. The only thing that MSP offers that ORD doesn’t is seasonal service to Iceland; but MSP has only one daily to London, one daily to Singapore, one daily to China (including HKG), one daily to Japan, one daily to Frankfurt, one dailt to Sao Paolo. There are 2 daily to Paris, but no other overseas nonstops. There isn’t a single, year-round, daily nonstop from MSP to *any* city in Mexico (tho that’s also probably a Gulfstream destination).

So, if transportation is actually a part of the calculus, MSP loses, badly, for a genuinely global entity like ADM.

Comment by Chris Tuesday, Oct 8, 13 @ 11:18 am
“If the not-Illinois sentiment makes Minnesota attractive”

The ‘not-Illinois’ sentiment makes *everyplace* without a totally dysfunctional political process attractive.

Now, if anyone claims that and then moves anywhere in the USA, they’re lying to themselves.

Comment by Chris Tuesday, Oct 8, 13 @ 11:21 am
I’m sure the Supermarket to the World can find a nice storefront in the Mall of America.

Comment by Michelle Flaherty Tuesday, Oct 8, 13 @ 11:21 am
Just checked the Minneapolis airport flight schedule. Excluding Canada, they only have 7 international flights per day. One flight to Shanghai, none to Beijing. Given the assumption that air travel globally is an item to be considered….. Do the execs really want connecting flights?

Comment by Darienite Tuesday, Oct 8, 13 @ 11:49 am
@Chris -
Did not see your post. It said it a lot better than mine.

Comment by Darienite Tuesday, Oct 8, 13 @ 11:52 am
- Just checked the Minneapolis airport flight schedule. Excluding Canada, they only have 7 international flights per day. One flight to Shanghai, none to Beijing. Given the assumption that air travel globally is an item to be considered….. Do the execs really want connecting flights?-

ADM has several corporately owned planes. They are not flying commercial airlines. They only need a decent runway and hangar.

Comment by CLJ Tuesday, Oct 8, 13 @ 12:00 pm
CLJ, I think those corporate planes are for shorter hops. They’re pretty far flung and need a real airport.

Comment by Rich Miller Tuesday, Oct 8, 13 @ 12:05 pm
Something worth mentioning in the “other factors” category re: Minnesota. The state already has the headquarters for Cargill so there already would be ag executives and scientific researchers in the area to recruit.

Comment by hisgirlfriday Tuesday, Oct 8, 13 @ 12:07 pm
Bye!!

Comment by Union Man Tuesday, Oct 8, 13 @ 12:13 pm
I have no actual idea of the monetary value, but undoubtedly Illinois has helped ADM achieve the multi billion dollar gross revenues through a collective of real and personal property tax abatement, infrastructure development, direct subsidy, and favorable legislative policy on the local and state levels for decades. Management needs labor just as much as labor needs management in a successful enterprise. This flaunting of relocation to another state over a complete Bull $1.2M/yr incentive to move to Chicago (which is a great business decision & the North American city that makes sense for ADM) is worse than a joke, its an insult to me & my 5% income taxed small business that gets no breaks. Public/Private partnership is about bring partners. Move to Chicago, keep asking for the incentive, but keep up the state shopping charade & ADM should be shown the door.

Comment by Midstate Indy Tuesday, Oct 8, 13 @ 12:21 pm
“Business climate” may be a misnomer that conservative think tanks use to describe the quality of a state’s economy. For example, corporate tax breaks may give Wisconsin a better “business climate,” but that has nothing to do with the state’s currently-bad economy. Minnesota on the other hand may have a worse business climate, but its economy is better than Wisconsin’s–as far as the unemployment rate.

Business climate is a supply-side phrase that is not directly correlated to the economic health of wage earners, who are struggling and who basically drive an economy.

Comment by Grandson of Man Tuesday, Oct 8, 13 @ 12:55 pm
This is bargaining chip #1. Look for Missouri to host bargaining chip #2. If they need a third chip, they’ll get one. The music is playing and the dance has started.

Comment by A guy... Tuesday, Oct 8, 13 @ 1:02 pm
ADM will choose Chicago when it’s all said and done. The question is, how much will the state kick-in and how much will the city kick-in? In addition to the airport access and transit benefits, the culture and north shore family life, the food and entertainment options, a very big factor is to be closer to CME, which is inextricably linked to ADM’s business.

Chicago is a great choice, but it’s sweetened by being home to the center of the global grain and commodities market. In the business world, they call it synergy. I think they’d be wise to move even without subsidies, but you can’t blame them for asking.

Comment by 47th Ward Tuesday, Oct 8, 13 @ 1:11 pm
Many people have claimed that if ADM takes jobs out of the state there would be an important loss of consumer spending on the basic cost of living. I find it extremely hypocritical that many proponents of this argument also support cutting state pensions. Don’t retirees that live on state pensions contribute significantly to their local and state economies every time they buy groceries, put gas in their car, eat a meal at McDonald’s, etc., etc.? I don’t put my pension check under my mattress!

Comment by My Thoughts For Whatever Tuesday, Oct 8, 13 @ 1:56 pm
They’re not going to Minnesota. They’d spend half their time flying Delta back and forth from Chicago.

Chicago’s a dual hub city. That’s a big deal to ADM.

Why Quinn threw them into the mix is known only to him. It may complicate things for a while, but in the end it will get done.

47 is correct regarding CME and CBOE as well.

Comment by wordslinger Tuesday, Oct 8, 13 @ 2:01 pm
Rich Miller - Tuesday, Oct 8, 13 @ 12:05 pm:

=CLJ, I think those corporate planes are for shorter hops. They’re pretty far flung and need a real airport.=

ADM flight department has large corperate jet aircraft such as the 7X made by Falcon that are for international non stop flights. They also have Falcon 900 which is much the same. That is how the big boys travel at ADM, by corperate aircraft. The top dogs are not about to wait around at airports and go through security waiting for connections etc.

Comment by facts are stubborn things Tuesday, Oct 8, 13 @ 3:03 pm
call there bluff. if the go good riddance, it means all the money that the city of chicago has spent on cultural, entertainment, and infrastructure is not important and the company will be back at the tax break trough for more at the blink of an eye.

stop the corporate extortion.

Comment by Anonymous Tuesday, Oct 8, 13 @ 4:33 pm
Could it be that MN has a better shopping mall than Decatur?

Comment by Mama Tuesday, Oct 8, 13 @ 4:36 pm
The high state income tax in Minnesota won’t be a deterrent for ADM if they can convince Minnesota to let ADM keep their employees’ state income tax. But nothing Minnesota does will make up for the cultural and transportation advantages of being located in Chicago. The ADM executives really, really want to live in the Chicago area, not in Minneapolis.

Comment by Ruby Tuesday, Oct 8, 13 @ 5:19 pm
Someone mentioned infrastructure? Isn’t Minneapolis-St Paul where the highway bridge failed and killed several?

Education in Minnesota is going through belt tightening with teacher layoffs and less spent on school libraries, online resources, etc. Granted they started with more funds spend per pupil in Minnesota than Illinois.

Comment by Nearly Normal Tuesday, Oct 8, 13 @ 5:50 pm
First of all, Illinois’ corporate tax rate is 9.7 percent because you have to include the corporate personal property replacement tax so its a wash with the 9.8 percent rate in MN

@my thought - there is not a pension plan that “cuts” pensions. It’s a great sound bite but factually incorrect. The pension plan changes simply slow the rate of growth.

ADM buys $8 billion from instate vendors and pays significant taxes. Income taxes are low because most of their sales are global and don’t occur in Illinois.

Comment by 1776 Tuesday, Oct 8, 13 @ 8:18 pm
–First of all, Illinois’ corporate tax rate is 9.7 percent because you have to include the corporate personal property replacement tax so its a wash with the 9.8 percent rate in MN–

What’s your point? ADM testified they pay chi-chi beans in state corporate income tax already.

As far as ADMs $8 billion in Illinois purchases a year — like what, corn? No kidding. That’s what they do. They’re going to stop buying Illinois corn if they move to Minnesota?

Listen, in a bizarre week, a corporation with $2 billion a year in profits bothering to shake down the state for $1.2 million a year for the coffee fund and Quinn tying it to pensions almost ranks with the Banana Republicans in Washington.

It’s all just weird. Don’t try to rationalize it.

Comment by wordslinger Tuesday, Oct 8, 13 @ 11:23 pm
@Old Man -

Yeah, cause flying from St, Paul to Sao Paulo or Beijing is so much fun.

Minnesota ain’t gonna happen, but I agree with Rich, there would be an awesome side show.

What I’d like to here ADM admit is:

“We are not that concerned with Illinois pension problems and certainly don’t consider it a ‘crisis.’ It certainly has very little impact on our ability to do business or create jobs, with all due respect to those arguing to the contrary.”

THAT would make a bunch of heads spin and pop off.

Instead of tax breaks, candidate Rauner should offer to help clout ADM execs’ kids into the school of their choice.

Comment by Juvenal Wednesday, Oct 9, 13 @ 7:40 am
Not moving:

http://www.chicagotribune.com/business/breaking/chi-adm-exec-buys-26m-chicago-condo-20131009,0,1133507.story

“ADM flight department has … aircraft such as the [Falcon 7x and the] Falcon 900″

Neither of which get you to China or Australia.

In any event, they can *no doubt* charter (or netjet or whoever) whatever sort of aircraft they need for whatever purpose, but if one guy is going to a meeting in Beijing, or two guys are coming *in* from Australia, (1) ADM ain’t firing up the jet, and (2) ORD beats all over MSP.

Comment by Chris Wednesday, Oct 9, 13 @ 3:29 pm