In an interview on today's Republican Senate Majority Caucus's "Inside the Senate" broadcast, hosted by Waseca senator Mike Parry, freshman senator Roger Chamberlain repeats the Republican mantra that Minnesota's rate of taxation will drive business to relocate. Chamberlain serves on the Senate Taxes Committee.
The most fascinating point where Chamberlainplugs a round talking point into a square hole is his mention--twice--of recent lay-offs by Medtronic.
At 11:40, Chamberlain says:
I agree with 3M, enough is enough. they have to be able to compete on a global basis and if they can't, they'll either move their headquarters, expand other places, or eventually they'll go out of business. Honeywell left, others will leave. Medtronic laid off people...
Problem: there's nothing in news reports to suggest that the Medtronic lay-offs were caused by high taxes.
On February 22, MPR's Martin Moylan reported in Medtronic plans huge job cuts, impact in Minn. unknown:
Medtronic, the world's largest medical device maker, plans to eliminate up to 2,000 jobs company-wide. The cuts are part of a restructuring effort to make up for disappointing sales of its implants.
The Fridley-based company said Tuesday the downsizing will involve both layoffs and not replacing workers who depart or retire. The cuts are aimed at achieving "long-term sustainable growth" and will reduce its 41,000-person work force by 4 to 5 percent. . . .
The layoffs announcement came as Medtronic reported net income of $924 million for the three months that ended Jan. 28, beating Wall Street expectations. Sales rose about 3 percent to nearly $4 billion....
Those sluggish sales are caused in part by consumer choice when faced with having to pay a greater share of medical costs, competition with the industry and pressure from insurance companies to lower costs:
Patients are paying an increasing share of their health care costs, causing people to delay optional procedures requiring expensive devices, Wald said.
"Even defibrillators, even pacemakers, especially spine products, the neurology products ... they can all kind of be postponed because they're not life threatening," he said. "So, if you look at it kind of that way, there's a number of products and product lines at Medtronic that are susceptible."
And Wald said Medtronic also faces intensifying competition from rivals, as well as pressure from insurers determined to cut reimbursements for medical devices.
(An aside: one standard conservative argument for health savings accounts is that consumer choice will make people more aware of health care costs and so drive down costs; reduced demand for Medtronic's products is certainly illustrative of this notion of consumer-driven health care).
And taxes? The Star Tribune's report, With growth starved, Medtronic is cutting jobs, links taxes with the company's increased earnings:
Overall sales for the quarter ended Jan. 28 declined 3 percent, to about $4 billion. Earnings were $924 million, or 86 cents a share, compared with $831 million, or 75 cents a share, the same period last year.
Analysts were expecting the company to earn 84 cents a share. Leerink Swann analyst Rick Wise wrote in a note to investors on Tuesday that although Medtronic beat Wall Street expectations by a few pennies, that performance "was driven almost wholly by a much lower-than-expected tax rate."
No word whether those taxes were state or federal, but it's not high taxes directly causing the lay-offs. Lower taxes contributed to higher earnings, but the lay-offs occurred because of disappointing sales.
Nor have, so far as I can tell, representatives from Medtronic appeared before the committee on which Chamberlain sits.
Photo: State Senator Roger Chamberlain, R-Lino-Lakes.