Unless the Legislature acts, Minnesota will be collecting taxes on forgiven Paycheck Protection Plan loans the federal government provided to businesses to help them keep afloat amid COVID-19 setbacks.
This needs to be fixed. The state should not be taking a cut out of this emergency funding. In fact, the Tax Foundation reports Minnesota is the only state in the Upper Midwest that has yet to exempt PPP loans from state income taxes.
More than 102,000 Minnesota businesses received federal PPP loans and presumably applied them to the specific uses, such as keeping employees on the payroll, making mortgage payments and meeting other financial obligations outlined in the terms. I don’t think “set aside 10 percent for your state tithing” was part of the plan and it shouldn’t be. The state has a $1.6 billion surplus, so revenue constraints also should not be an issue.
We should pass legislation to fix this now instead of tempting fate by waiting until end-of-session negotiations. People need to plan and should not be left hanging on this issue.
House Republicans strongly support lifting this tax, the Senate Tax Committee this week approved such a measure in a committee, the governor has expressed openness to the idea and the DFL chair on taxes has shown support.
So what’s the holdup in the House? There’s no reason to wait.
Let’s pass a clean bill to eliminate this tax and send it to the governor to enact. Minnesota businesses have been through enough already during the last year and deserve a bipartisan remedy for this issue to move through the Legislature and on to the governor for enactment as soon as possible.