Our friends from Billings gaze lovingly on Sioux Falls and conclude that the Minnesota-esque policies of adding a tax and building infrastructure are good for economic development. But even if you think South Dakota's low-taxes philosophy still gives us an advantage over Minnesota, we still can't compete with Ireland. Rather than uproot, Medtronic is staying in the beautiful Twin Cities, paying $42.9 billion to acquire Irish surgical-device maker Covidien, and simply moving its headquarters on paper to Dublin to get a lower corporate income tax rate.
But wait: the boss says taxes aren't the prime mover here:
While the deal will allow Medtronic to reduce its overall global tax burden, the Minneapolis-based company said it was driven by a complementary strategy with Covidien on medical technology rather than tax considerations
"The real purpose of this, in the end, is strategic, both in the intermediate term and the long term," Medtronic Chief Executive Omar Ishrak said in an interview after the deal was announced. "It is good for the U.S. in that we will make more investment in U.S. technologies, which previously we could not."
Medtronic's corporate tax rate, now at around 18 percent, won't change much, Ishrak said [Susan Kelly and Greg Roumeliotis, "Medtronic to Buy Covidien for $42.9 Billion, Rebase in Ireland," Reuters, 2014.06.16].
Maybe Medtronic's CEO is just trying to downplay the the unpatriotic business of trying to dodge taxes. But he and his 8,000 employees will stay in Minnesota and keep paying Minnesota state income taxes, as will the 1,000 new workers Ishrak says Medtronic will add in the next five years.