Hello from St. Paul,
Lawmakers returned to the State Capitol this week and we will be debating various omnibus bills put forward by the House Majority. I am most concerned with the omnibus tax bill, because getting tax relief for Paycheck Protection Loans and pandemic unemployment are top priorities.
Their bill raises taxes by more than $1 billion and, despite widespread bipartisan support, fails to fully protect all businesses from Paycheck Protection Program (PPP) tax hikes on forgiven loans.
You’ll recall that impacted business owners who accepted Payroll Protection Program (PPP) loans are being targeted by state government. If businesses used their PPP loans to pay wages, rent, or other criteria approved by the federal government, those loans were ultimately forgiven and were free from federal taxation.
But Minnesota has not conformed its tax code to match the federal law, and in doing so, is the only state in the region that has yet to exempt forgiven PPP loan income from state income taxes.
Under the House majority plan, a cap would be placed on accepted PPP loans, meaning not all Minnesota business owners would have their loans exempted at the state level. This might be worthy of consideration, if our state had a substantial deficit, but we have a huge surplus. We don't need to be squeezing Minnesota businesses that have already suffered from the pandemic.
Giving credit where its due, their proposal would spare unemployment benefits from state taxation. That proposal along with exempting all PPP loans has broad bipartisan support. The bill would also create a new income tax tier and give Minnesota the 2nd highest income tax rate in the country and directly hit many businesses who have been devastated during the pandemic.
To me, it is unwise to advocate raising taxes, on individuals and businesses, when Minnesota has billions of dollars more than it needs to fund government already. From the economy recovering faster than expected, to the eight billion dollars coming in from the federal government, Minnesota government has more money to spend than it has ever had. We don't need to nickel and dime Minnesotans.
With that in mind, we should focus our budget on helping those who have been affected most by the pandemic, not vindictively punishing those who haven't 'suffered enough.’ There is so much both parties agree on. Let's not pretend this is just another normal year for partisan warfare. We are coming out of a pandemic. Both the Senate Republicans and House Democrats have historically small majorities. Minnesotans clearly want us to work together. Let's stay focused on policies with bipartisan support and leave the politics aside. We shouldn't be back to business as usual.
Talk to you soon,
Nolan