Thanks to everyone who has taken time to testify before legislative committees on the priorities facing Minnesota manufacturers.
More than 90% of businesses pay income taxes through the individual income tax system. These pass-through companies - S Corporations, LLCs, sole proprietors and partnerships – employ 56% of all private-sector employees in Minnesota and are the fastest growing types of businesses. Minnesota’s individual/pass-through income tax rate of 9.85% is third highest in the nation. This cost reduces the ability of companies to reinvest in their businesses and employees. We support reducing our tax on pass-through companies by capping the top rate at 7.85% or by exempting a portion of business income. We also support a reduction in the overall individual income-tax rate to encourage talent recruitment and investment.
Following is an excerpt of testimony from Steve Wise advocating for a reduction in the personal income tax. Steve serves on the board for Cass Screw Machine Products in Brooklyn Center.
“We are providing 120 families with a livelihood – good jobs, health insurance and retirement. This mission is in jeopardy if my costs of doing business continue to creep up and up. A casual observer would counter, “Just sell more of those parts!” But the market for my parts is far from guaranteed.
“Bottom line is, two things happen when Minnesota businesses continue to be strapped with burdensome fixed costs: No. 1, we need to work longer and harder to cover those costs, resulting in decreased profitability and less opportunity to provide wage increases, benefits, or expand. No. 2, when it becomes necessary to pass these costs along in our prices, our customers are motivated to move the business to my regional competitors where those fixed costs are not so high, like North Dakota and Iowa.
“By reducing this tax, Minnesota businesses will be more competitive and able to hire additional workers, invest in plant and equipment, and keep the Minnesota economy strong.”