Dear Neighbor,
Lots of ground to cover this week from the House, starting with efforts to provide tax relief at a time the state has a $7.7 billion surplus at a time Minnesota families and businesses alike are facing higher costs on pretty much everything.
First off, I am urging legislative action to spare local businesses from suffering an unnecessary tax increase. On March 15, business owners face a 15% or more payroll tax hike due to record-setting unemployment claims that depleted Minnesota’s Unemployment Insurance Trust Fund amid the COVID-19 pandemic. The federal government provided more than $1 billion to make up for the shortfall. Now, to account for that deficit, Minnesota payroll tax rates are set to increase unless the Legislature acts.
It would be an injustice forcing businesses to pay higher taxes because more people have been out of work during the pandemic. They’ve been through the wringer the last couple of years and we need to help them recover instead of saddling them with higher taxes.
The Minnesota Senate Finance Committee has unanimously approved a bipartisan unemployment insurance repayment bill. Meanwhile, House Democrats advanced a proposal on a party-line vote to repay the unemployment insurance trust fund only partially.
Under the House Democrat proposal, the UI fund would only be repaid to $0, rather than the full repayment proposed by House and Senate Republicans, as well as Gov. Tim Walz. The Department of Employment and Economic Development has confirmed failure to fully repay the trust fund would still trigger six years of increased tax rates for businesses.
On another subject related to tax relief, there has been discussion over the past few years In Minnesota of reducing or even eliminating the state income tax on Social Security benefits. The Legislature did take a step in that direction three years ago when it increased the income ceiling at which a state subtraction used to reduce the amount of tax owed would begin to phase out.
I support the elimination of the state tax on these benefits. Minnesota is among the last dozen states to still tax Social Security. Folks have paid into the system throughout their working careers, and with many recipients on fixed incomes, these Social Security benefits shouldn't be taxed. None of our surrounding states levy this tax.
On a final note, concern is rising over the discovery of Avian Bird Flu in other parts of the world. Widespread reports coming from Europe earlier this winter have been followed by cases among wild birds along the U.S east coast in Virginia and in both North and South Carolina. Now, reports of an infected commercial flock in Indiana have emerged.
The worry is that wild birds' migratory patterns could spread the disease to flyways further to the west, including the Mississippi flyway in the central U.S. This serves as a reminder that AI is spreading around the world in wild birds as they migrate.
It was back in 2015 that our state suffered a major outbreak of the disease, although that year it was first reported on the west coast. The Minnesota Department of Agriculture along with the Board of Animal Health are working with poultry producers in reviewing the biosecurity plans they have in place.
I am confident we are better prepared today if an outbreak occurs than we were seven years ago. Stay tuned more on this and any other developments from the House.
Sincerely,
Paul