Tax competitiveness tops Chamber priorities
Taxes continue to be a top issue for Minnesota companies.
Our members tell us year in and year out that Minnesota’s comparatively higher taxes – in nearly every tax category – is one of the most important issues for the Legislature and Governor to address.
Why do competitive tax rates continue to be an issue? Because they are so critical to business success. Watch the Chamber’s Beth Kadoun explain in committee testimony how important a friendly tax climate is for Minnesota businesses.
Our goal is simple: To ensure that Minnesota’s tax system encourages long-term business success. That means supporting innovation, entrepreneurship, and making our tax system more competitive.
In the 2019 legislative session, we succeeded in passing a number of positive proposals for the business community. We reduced the statewide business property tax by 6%, reduced the second-tier rate in personal income taxes and supported federal tax conformity to help ease compliance administrative burdens and complexity. Some businesses unfortunately will still see an income tax increase as provisions are only partially offset by state tax-relief measures.
A large part of our success came in preventing massive tax increase proposals that would hurt every business in the state. This session, we prevented;
- More than $9 billion in proposed new taxes, the lion’s share which would have been paid for by Minnesota employers. More than $12 billion were proposed; end result was a $2.6 billion increase mostly due to the removal of the sunset on the 2% provider tax now reduced to 1.8%.
- New capital gains tax rate of 12.85%, second highest in the nation.
- Retroactively taxing foreign earnings of multinational companies. Minnesota will join the majority of other states by not including the foreign income provisions in the 2017 federal tax bill (deemed repatriation, GILTI and FDII).
- A rollback of Minnesota’s estate tax threshold to $2.7 million.
- Automatic tax increases on business property taxes and tobacco taxes.
- New worldwide reporting requirements that would have gone in the opposite direction of the United States, other countries and other states that have moved to a territorial tax system that taxes income earned within their borders.
- Repeal of sales tax exemption for computer software, an economic development incentive for locating data centers in Minnesota.
- A proposal to give state revenue commissioner broad authority to disallow tax provisions.
Despite an overall positive session regarding taxes, we know there’s still more work to do. In the coming months, we’ll be preparing our legislative priorities for the 2020 session.