Late in the session, Larry Haws and Larry Hosch, aka Tarryl’s brother Larry and Tarryl’s other brother Larry respectively, voted against Rep. Keith Downey’s bill that would’ve started an angel investment tax credit in Minnesota’s tax code. Now Minnesota will feel the impact of Rep. Haws’ and Rep. Hosch’s vote:

Another Minnesota tech startup is moving across the border, prompting renewed questions about the competitive standing of the state’s business climate.

VitalMedix, a Minneapolis biotech firm, said last week that it is negotiating leases in Wisconsin and expects to move to either Hudson or New Richmond within the next 90 days.

Jeff Williams, the company’s CEO and founder, said VitalMedix’s relocation will enable it to benefit from Wisconsin’s friendlier business climate, including its tax investment credits law that encourage financial support from so-called angel investors.

“The investment climate (in Wisconsin) for small (biotech) companies like ours is more favorable” than Minnesota’s, said Williams, previously CEO-in-residence of the Venture Center at the University of Minnesota. “Right now, it is more difficult to raise money in the Twin Cities for small companies.”

During the House floor debate, Rep. Ann Lenczewski said that the Tax Committee that she chairs discussed this for over two hours. Apparently, Rep. Downey’s proposal wasn’t accepted. Why it wasn’t accepted within minutes is startling. In fact, it’s unforgivable. It’s especially unforgivable because Minnesota desparately needs job creators, especially high tech jobs.

What makes this stink even more is the fact that Rep. Haws serves on the Bioscience and Workforce Development Policy and Oversight Division. You’d think that, if there’s anything that someone serving on that committee would fight for, this would be the legislation that they’d fight for. Several DFL members of the oscience and Workforce Development Policy and Oversight Division voted for Rep. Downey’s proposal, including Rep. Poppe and Rep. Obermueller. Other DFL legislators voting for Rep. Downey’s proposal were Rep. Pelowski, Rep. Bunn, Rep. Dittrich, Rep. Davnie, Rep. Kalin and Rep. Swails.

Rep. Haws and Rep. Hosch, along with 69 other DFL legislators, voted to give Wisconsin a bunch of high tech, high wage jobs at a time when Minnesota desparately needs job creators. I’d like to know is why they voted against these investment tax credits. Are these DFL legislators that ideologically opposed to tax cuts that they’d rather see high paying jobs leave the state than provide tax incentives? It certainly appears that’s the case, doesn’t it?

Last fall, I repeatedly said that Rep. Haws prefers a public works-oriented budget. He’s also a big proponent of prevailing wage legislation. Unfortunately for Minnesota, he and other DFL legislators put a higher priority on those issues than they put on intelligent 21st Century tax policy.

How often have you heard DFL activists and legislators say that the key to creating lots of high tech jobs is a good education system? Personally, if I had a sawbuck for each time former St. Cloud Mayor John Ellenbecker told me that, I could afford a new hybrid SUV.

Apparently, VitalMedix disagrees with Mr. Ellenbecker. Tehy obviously think that access to investment capital is important in creating a vibrant, healthy company. VitalMedix’s abandoning Minnesota for Wisconsin is proof that Minnesota’s tax system needs a massive, un-DFL, overhaul that helps Minnesota attract and keep companies like VitalMedix.

I contacted Rep. Laura Brod because she’s the Ranking Republican on the Tax Committee in the Minnesota House of Representatives for her reaction. Here’s Rep. Brod’s thoughts on VitalMedix:

“Minnesota needs to hear the wake up call that businesses like VitalMedix are sending as one after another flee our state and take innovation and good paying jobs with them. Many businesses are at the same tipping point and policymakers should be very concerned that the cost of doing business in Minnesota is simply out of whack and we are losing jobs because of it. Businesses and investors are price sensitive and have choices. For too long, there has been quite a bit of rhetorical “concern” by legislators with little action.

In fact, the Democrats’ recent tax proposals would have set us back even further and potentially chased even more businesses out. The wake up call has been sounded and now it is our job to put forth bold reforms that encourage economic growth and opportunity. The issue of ensuring a competitive economic environment is not just a business issue—it’s an issue for families as they seek to get or keep a good paying job, for college students looking for that first place of employment, and for the health of our state and local communities in general.

But there is hope for the future of Minnesota’s economy as long as we commit ourselves to real tax reform and spending restraint. When state government sets the right balance regarding the level and manner of taxation, our history of innovation and investment will once again lead us to economic prosperity.”

There’s no chance that Minnesota will be the center of innovation as long as the DFL takes a hostile view of innovative companies like VitalMedix. As long as the DFL keeps thinking that increasing taxes won’t affect capital flight, investment capital will remain out of reach for companies like VitalMedix.

If we’re serious about improving Minnesota’s business climate, then eliminating the DFL majorities in the House and Senate must be our highest priority.

UPDATE: King’s post explains why we need more than a great education system to keep high tech jobs in Minnesota. It’s the best explanation of all the things a starting business needs to succeed that I’ve read to date.

Technorati: Taxes, VitalMedix, Investments, Capital, Tax Credits, Larry Haws, Larry Hosch, Ann Lenczewski, DFL, Gene Pelowski, Jeanne Poppe, Mavericks, Laura Brod, Fiscal Restraint, Tax Reform, Conservatism