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Legislative News and Views - Rep. Joe McDonald (R)

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Legislative update

Thursday, February 24, 2022


Hello from the Capitol, where permanent tax relief remains the top priority for me and fellow House Republicans this session and the opportunity to provide unprecedented, meaningful tax relief may be even larger than previously anticipated.

While House Republicans are proposing numerous worthy sources of tax reductions, I personally have authored bills to reduce both the personal income tax and the corporate franchise tax by 1 percent each.

Reports show our state’s income taxes and business taxes both rank among the most expensive in the nation. This is only making it even more difficult to afford the higher prices on everyday items we are suffering under the Biden-Walz economy.

Many people would say 1 percent reductions are not enough and they’re right. I also would rather propose even larger reductions on our income taxes and business taxes. But, for now, 1 percent is something I hope House Democrats and the governor can see as realistic and support this session, and I will keep hammering at reducing the tax burden year after year. The state clearly is taking more money from taxpayers than necessary and this is an easy, beneficial way to ease the load.

Reducing taxes on our small businesses also would make Minnesota more competitive with neighboring competitors in today’s global economy. All of our surrounding states have lower income taxes and business taxes than Minnesota. South Dakota has zero income tax for that matter, while Minnesota’s top rate is 9.85% - increased during the Dayton years.

Tax reductions for small businesses are as important as ever these days with more and more entrepreneurs setting up shop in their own homes. Numerous factors are contributing to this development. State officials have indicated loss of employment due to the pandemic, increased flexibility, childcare needs and greater comfort with video conferencing all play roles.

A new economic forecast will be issued next week, providing firm figures for exactly how much relief can be provided this session. The last full forecast projected a $7.7 billion state surplus and the ensuing months appear to have added to that total and might even further expand the surplus.

Remember, this is not a budget year and the state is fully funded for the biennium, so there’s no excuse to not return this massive over-collection of tax dollars to the people. We also have a March 15 deadline for legislation to be enacted sparing businesses from suffering a tax increase due to Minnesota’s depleted unemployment fund.

Gov. Walz, House Republicans, Senate Republicans and Senate Democrats all have supported full repayment on the UI fund. The Senate fast-tracked passage of a bipartisan UI bill, but House Democrats propose only going halfway. This would trigger six years of tax increases on businesses, the Minnesota Department of Employment and Economic Development confirmed.

Watch for more news on these and other developing subjects soon and, as always, please stay in touch.



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