By Rep. Jeff Dotseth
Minnesota’s job creators and Main Street businesses are the backbone of our local economy and many have faced challenges beyond anything they could have imagined the last few years.
Mandates issued by the governor amid COVID-19 forced a lot of businesses to close their doors. Then came soaring prices with inflation rates we hadn’t seen in 40 years, and supply-chain issues complicating matters even more. On top of that, a workforce shortage that already existed in our state grew, whether due to extended unemployment benefits or for other reasons.
With all that in mind, our state should be doing all it can to give the small-business owners – entrepreneurs running true mom-and-pop shops I our state – some breathing room to help them regain their footing and thrive.
Minnesota’s tax rates are in the top 10 highest for both individual and corporate taxes. Our state also remains one of just 12 states imposing an estate tax. It’s time to improve the tax climate in our state, breaking down barriers to economic growth that undermine our region’s ability to attract and maintain talented workers and their families which are crucial to our long-term outlook.
Our state has a highly developed economy with great diversity just begging to hit full stride. Look no further than our own back yard, where we have rich reserves of minerals, abundant timber, and skilled laborers. It is unfortunate much of our potential remains untapped as Minnesota continues losing residents to other states. Reports show our state’s domestic net migration ranked 42nd worst in 2021, and our workforce growth has stagnated.
With a state surplus of around $18 billion, we are staring at a golden opportunity to unleash our economy and help workers thrive and House Republicans have authored numerous bills to make that happen. First of all, Minnesota’s top individual income-tax rate is the sixth-highest in the nation at 9.8 percent - higher than all non-coastal states. H.F. 977 has been introduced to cut all tiers of income tax rates by one percent.
Another bill, H.F. 1561, cuts corporate franchise tax by one percent. This is important because, by 2024, Minnesota will have the highest corporate income tax rate in nation at 9.8 percent. The corporate tax is a regressive tax which, ultimately, is paid by consumers, employees and investors. We can do better.
I also should note I am pleased to be the chief author of H.F. 516 to fully repeal the state tax on Social Security, providing some breathing room for seniors. A full Social Security tax repeal would benefit an estimated 473,000 people with an average tax savings of $1,276.
While House Republicans continue working to make life better for Minnesota workers and families, bills House Democrats are advancing take us the wrong direction with onerous, one-size-fits-all mandates – including related to worker leave. As alternatives, House Republicans have bills (H.F. 1722 and H.F. 494) that deliver paid family leave tax credits as incentives for businesses that aren’t already providing these benefits to do so. This is a much more productive approach to achieving our goals than adding more burdensome mandates and increased taxes on already overwhelmed job providers.
Between House Democrat proposals related to worker leave and the governor pushing to raise taxes at a time the state has an $18 billion surplus, Minnesota workers could be dealt even more setbacks if these concerning measures are enacted into law.
I will continue working to solutions that will benefit all the people of District 11A by freeing up our economy so workers can earn more and we can keep more families here at home to live, work and go to school.
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