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Tuesday, February 24, 2009

The Minnesota Department of Economic Suppression

This story is about Lisa – not her real name – an enterprising young business consultant.

Early in 2008, Lisa was visited by a well-paid agent of the Minnesota Department of Employment and Economic Development. Let’s call him Mr. DEEDS. He announced simply, “I’m here for the audit.”

First a little background about Lisa. Since she was a kid, Lisa dreamed of building a business empire right here in Minnesota. Through hard work and perseverance, her dream started to come true. She was a consultant to business in setting up specialized software to make business more efficient. A couple of years ago, she decided to add a full time employee, then a programmer under contract, and later another full time employee.

Lisa is very proud of what she’s doing. And she was proud to have started two young people on very profitable new careers. Business was good and humming. That is until Mr. DEEDS showed up.

Apparently the issue was whether Lisa had paid enough Unemployment Insurance as well as whether the contractor was a full time employee from two years back. To Lisa, both issues were no brainers. The contractor confirmed that he was under contract at the time in question.

To be safe, Lisa hired an attorney, an expense she would have to pay herself. Meeting with the attorney cut into her billable hours. She had to pay her accountant extra as well, all to satisfy Mr. DEEDS.

Lisa travels a lot in her business. She actually can work from almost anywhere and in fact could set up her business in any state. But she had decided to stay in Minnesota. She told Mr. DEEDS very courteously but firmly that the more time she spent on his issue, the fewer taxes Minnesota would receive, because he would cut into her billable hours. Nonetheless he kept up the unproductive pursuit.

A year has come and gone. Several times Lisa has tried to contact Mr. DEEDS to get a resolution. To get closure. Nothing doing.

Now Lisa has nothing but questions about the Minnesota Department of Employment and Economic Development. She thinks the whole issue was too simple for Mr. DEEDS to waste his or her time on. Was he snooping for some other reason? Or was this just clumsy bureaucratic standard procedure? She figures the guy costs the state about $80,000 a year in salary and benefits. And to what purpose?

Just a phone call from Mr. DEEDS would have helped. A brief apology. A sorry for the inconvenience. But no. It was important enough to disrupt her business and cost her money. But not important enough for the state to bring closure. Lisa has done nothing wrong, owes no money to the state. She pays her taxes regularly. The state gets a big cut.

But there is a result that’s bad for Minnesota. Lisa has decided to give up her dream of a business empire. She had to ask herself whether it is worth it. Why hire employees at all? If the State will harass her for nothing is it really worth the bother. She can make a good income without the employees. And if she later decides she needs to build her business, why in the world would she do it in Minnesota? Other states are more business friendly.

About a month ago was maybe the last straw. She was notified that since she was an employer and unemployment was up, her unemployment premiums would go up.

Lisa now has no additional employees. No contractors. Just herself. And she is considering relocating.

Is anyone in the governor’s office listening. The DEED office. The Legislature. Hello! Businesses have no reason to stay or grow here!


Anonymous chauncey said...

a good story...give her belssing

2/24/2009 9:40 PM  
Blogger Right Hook said...

The problem is that there are thousands of small business owners like Lisa in the state and that many are following the same course.

It's too bad that the small business people and their employees lose out and non-productive bureaucrats like Mr. DEEDS and many others in government continue to earn a good living off at public expense while producing nothing of value.

2/24/2009 9:45 PM  

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