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RELEASE: Rep. Daniels: Local Employer Tax Increase Moves Forward Due to House Democrat Inaction

Thursday, March 17, 2022

ST. PAUL – The March 15th deadline to prevent unnecessary tax increases on every business owner in the state has come and gone, and State Representative Brian Daniels, R-Faribault, says that House Democrats are to blame for the financial pain employers will see.

“Because of House Democrats’ inaction, the issues already caused by 40-year highs in inflation and rising energy costs will be made worse as employees could face layoffs and prices will likely go even higher as employers deal with this tax hike,” said Daniels. “With more than $10 billion in budget surplus and federal aid dollars, Minnesota has more than enough resources to replenish our Unemployment Insurance (UI) Trust Fund and stop these taxes from taking effect. Rarely is there such bipartisan support for an issue, that’s why I am so disappointed by House Democrats’ inaction.”

Minnesota needs to replenish its Unemployment Insurance (UI) Trust Fund by more than $1 billion. The fund was depleted because of record levels of unemployment claims by Minnesotans as Governor Walz forced businesses to close during the pandemic. Daniels said $9.3 billion in available state surplus funds could be used for this purpose, as could federal COVID relief funding that totals more than $1 billion. By not utilizing either of these pots of money, the default repayment is tax increases on local employers by 15% or more.

Last month, Governor Walz’s employment commissioner said March 15 was the deadline for the lawmakers to pass legislation and prevent significant tax increases on Minnesota businesses. Daniels said the commissioner told the workforce committee that a failure to act would “create major problems” for the State of Minnesota.

Since then, the Minnesota Senate approved a full UI repayment bill on an overwhelming 55-11 bipartisan vote three weeks ago, while House Democrat leadership did nothing. Before the deadline, Daniels noted House Republicans twice tried to move legislation that would have prevented these tax increases. In both cases, House Democrats blocked them from debate.