There’s a reason why you’re hearing those radio commercials for Sioux Falls, South Dakota: Minnesota is not a great place to start or run a small business, but South Dakota is.¬†That’s the word from the Small Business Survival Committee, which has recently released its annual index of the 50 states.

Minnesota comes in at #42 in the country. Are you surprised to learn that the top state is South Dakota? Me neither.

The committee evaluates the states on 17 measures, covering the following categories:
  • The burden of ¬†taxes, including individual income taxes, corporate income taxes, property taxes, and sales/excise taxes
  • Costs of hiring employees: unemployment insurance taxes; government-imposed costs on health insurance; costs of workers compensation
  • The cost government overhead, including the number of government employees in relation to the total workforce, and state spending
  • The costs of other inputs, including electricity, gasoline, and the cost-effectiveness of the highway system
  • a crime index
Minnesota does better than the national average in:
  • Number of state and local government employees per 100 residents (#15)
  • Cost of worker’s compensation (#17)
  • Public spending trends, or how much government spending has been increasing of late (#18)
  • Cost of electricity (#19) — but wait until renewable fuels mandates kick in hard
  • Crime rate (#20)
  • Property taxes as a percentage of income (#22) — though keep reading to look at the burden of other taxes
  • Sales, gross receipts and excises taxes as a percentage of personal income (#23)
  • Cost-effectiveness of state highways (#25)
In the department of “it could be worse,” Minnesota is below the national average for the following items–just not at the bottom:
  • Gas taxes (#32)
  • Diesel taxes (#32)
  • State and local spending as a portion of personal income (#35), which simply means we’re spending a lot of our higher-than-average income on government
Minnesota appears in the bottom 10 for:
  • Personal income taxes (#42)
  • Personal and corporate capital gains tax rates (#43 and #48, respectively)
  • Corporate income tax rate (#48!)
  • Unemployment tax (#49!)
  • Number of mandated benefits for health insurance policies sold in the state (#49!)
Finally, the state motto might be “Hey, at least we’re not ____!” Only 8 other states beat out Minnesota as places that are not friendly to small business. They are:
  • #43 Massachusetts
  • #44 Hawaii (the state’s job-killing insurance mandate long predates ObamaCare)
  • #45 Rhode Island
  • #46 Maine (older and poorer than you’d suspect)
  • #47 Vermont (represented in Congress by a self-avowed socialist)
  • #48 California (poster child of state-government dysfunction)
  • #49 New York (like California, without the weather!)
  • #50 New Jersey (corruption central)
  • #51 District of Columbia (Need I say more?)