Minnesota is used to feeling economic pressure from South Dakota. Remember these ads (via MPR)?
Whether MN's competitive disadvantage on business friendliness is real or perceived is up for debate. One of the more controversial ideas in Governor Dayton’s proposed FY 2014-2015 budget is an expansion of the state sales tax to include business-to-business services (also called professional services) such as accounting and legal services. Interestingly, Minnesota’s business-friendly neighbor to the west, South Dakota, already has a 4% state sales tax on professional services. While the Governor is set to issue a revised budget proposal in the next week or so to reflect the smaller projected deficit, he has indicated that he will not withdrawal his sales tax expansion. Dayton’s proposed sales tax would bring Minnesota’s overall rate closer to South Dakota’s (see Tax Foundation map below).