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State Chamber pushes for income tax relief

WORTHINGTON — As the Minnesota Legislature debates how the state should spend its $329 million budget surplus, taxes come up again and again.

Minnesota Chamber of Commerce Director of Communications Jim Pumarlo said most of that money should go toward income tax relief during a visit to Worthington Tuesday. The Chamber wants lower income taxes across all brackets — as 92 percent of Minnesota businesses file through their personal income — and lower corporate income taxes, which it argues are regressive and anti-consumer.

Minnesota’s income tax for top earners is 9.85 percent, fourth-highest in the county. The state’s lowest bracket — taxed at 5.35 percent — is higher than the top bracket in 23 states, Purmarlo said.

High taxes, the Chamber argues, make it difficult to attract employers, especially in Worthington, a border city.

“That's one thing that we always have a difficult time with when we’re trying to recruit business or industries,” said Darlene Macklin, executive director of the Worthington Area Chamber of Commerce. “In South Dakota, they don’t pay any taxes, so it makes it a little harder for us as a border community.”

South Dakota has no personal or corporate income tax. Iowa, on the other hand, has the highest corporate tax at 12 percent and the sixth-highest top individual rate at 8.98 percent, according to the Tax Foundation.

Pumarlo argued high income taxes also hurt a business’s ability to attract and retain top talent, who may prefer a lower-tax state.

Mike McCarvel, a Brewster farmer and member of the chamber’s Governmental Affairs Committee, offered that Minnesotans value the state’s high quality of life and thus don’t want extremely low taxes. Pumarlo agreed, and said the Chamber simply wants Minnesota to have “fair” taxes and a tax code that is more welcoming to businesses.

The biggest issues for Worthington-area businesses are workforce, daycare and housing, Macklin said.

Attracting highly educated talent such as engineers or graphic artists is increasingly difficult, said Marty Rickers, strategic partnerships and public relations manager for Bedford Industries.

In addressing those issues, Pumarlo said the Chamber supports investigating heavy regulations put on both housing and daycare, and investing more money into grants for daycare providers. He also said the Chamber supports changing the state’s workforce development program to give more control to local communities.

Another major priority for area business leaders is updating the state’s taxes to conform to the new federal tax code. Rickers said the Minnesota tax code needs an update to reflect changes to the Section 179 deduction, or problems could arise. Federal law says businesses can now deduct 100 percent of their expenses on equipment for one year — previously, they could deduct 20 percent of the cost each year for five years.

Gov. Mark Dayton has proposed making that exact change in his budget proposal. That’s about the only thing the Chamber was happy to see in his budget, Pumarlo said.

Dayton has proposed tax relief for more than 2 million Minnesotans. However, the Chamber is not pleased that Dayton wants to roll back tax cuts passed last year by the Republican-led legislature, including business property tax reductions.