The Minnesota House majority has approved taxes legislation that raises taxes by more than $1 billion and fails to fully protect all businesses from Paycheck Protection Program (PPP) tax hikes on forgiven loans. I opposed this plan.
It doesn’t make sense to raise taxes and not forgive all PPP loans from taxation when you have $1.6 billion in surplus funding, and several billion dollars more coming from Washington in the form of federal relief. The legislation would create a new income tax tier and give Minnesota the second-highest income tax rate in the country, as well as directly impact many businesses who have been hit hard during the pandemic.
Some business owners would also suffer from a cap placed on accepted Paycheck Protection Program (PPP) loans. These were loans many local employers used last year to help pay for employee wages or rent. Congress made these loans free from federal taxation, but not all Minnesota business owners would see the same forgiveness under the House Democrat bill.
Minnesota is one of only a handful of states taxing PPP loans. We’re talking about our neighbors who own Main Street businesses that accepted these loans. They are still struggling from restrictions handed down from the Governor’s Office, and failing to provide them with expected tax relief only worsens their financial situation.