Minn.’s Dayton Pits Tax Credit Vs. Corporate Tax

ST. PAUL, Minn. (AP) — Gov. Mark Dayton on Monday proposed exchanging part of a tax break for overseas businesses for one for companies that hire veterans, students or the currently unemployed in Minnesota.

The tax break-for-tax break swap is the cornerstone of a supplemental budget the Democratic governor plans to send to the GOP-controlled Legislature. It is modest in scope, containing roughly $60 million in changes to a multibillion-dollar budget. Other features include reversing some health program cuts made a year ago and replenishing accounts that pay for police body armor and military honor guards.

Dayton’s main proposal is reducing the state tax exemption for certain foreign royalties and income from 80 percent to 62 percent initially and an even smaller percentage down the road. The change would generate $40 million if enacted this year and more in years to come.

The bulk of the new money would offset a tax credit Dayton put on the table months ago. It would give companies a $3,000 credit for each new hire in Minnesota this year and $1,500 through June 2013, so long as the employees stay on the job for at least a year.

“It’s just a question of whether the priority is the people of Minnesota, which is mine, or the foreign operating corporations, which may be somebody else’s,” Dayton said.

Republicans have long resisted changing the foreign corporate tax exemption, arguing it would be a hardship on businesses and dampen reinvestment of profits.

Lawmakers set the state’s two-year budget last year, and technically don’t have to adjust it. A standoff wouldn’t result in a shutdown as it did last summer.

The supplemental budget also would reinstate coverage for dialysis treatment and cancer treatment that was reduced last year in public health insurance programs for the poor. Human Services Commissioner Lucinda Jesson said the administration was concerned providers would scale back on care if they saw that and reimbursements for other services fall too much.

A second tax change in Dayton’s plan has some support within GOP ranks. It would allow the state to collect tax on items purchased over the Internet that are used and consumed in the state. Some big retailers argue online sellers have an unfair advantage because their goods aren’t subject to taxes if they don’t have a physical presence in the state.

The budget plan also contains fee changes for hunting and fishing, with the proceeds plowed back into natural resources programs. One of them is a new wolf hunting license that would be sold for $50 for residents and $230 for nonresidents. Officials say the new licenses are part of a broad wolf management strategy.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • Pundit

    Companies should hire the most qualified person for each job.

    The government should keep it’s big fat meddling nose out of places it doesn’t belong.

    • Bring em Back

      they don’t hire the most qualified they hire the cheapest labor they can get and that leaves us without work
      Thank You Governor Dayton bring the jobs back to Minnesota workers

      • Grynch

        Hiring a particular type of person just for a tax break is just as shady as hiring for cheaper labor.

    • The Truth

      They should, but they don’t, which is why the government has to get involved. If you want smaller government, then do the right thing.

    • Tom

      @ Pundit

      People keep saying about keeping Gov’t out of places it doesn’t belong, but they end up asking the gov’t to get involved!

  • MOM

    I am wondering why the taxpayers should subsidize jobs sent overseas anyway. I have no problem with the corporations wanting to go global but not on my dime. Yes the Government should keep their “Fat meddling noses out of places they don’t belong and the first place is giving tax breaks to companies that are American in name only

    • Tom

      @ MOM

      Conservatives always dedend companies that move jobs over seas or into Mexico as it cheaper labor and helps with the companies profits. Conservatives have always put profits before people. Conservatives believe that you can’t help businesses unless you give them the “whole farm”!

  • Finally!!!

    YES! Now all he has to do is convince the other party to actually vote for something that will benefit the people they are supposed to represent. Overseas workers are not their constituents

  • ipmutt

    Many companies earn money overseas, making products there and selling them there. However if they bring the profits back to the US to develop new jobs here, they are charged huge ( 35% ) taxes. If these companies make money in a country like Singapore and invest there they pay no taxes. Yea zero. Many countries offer this. Can you imagine the incentive to invest, build and add jobs there. So we get a guy like Dayton who tells us to bring the money home but hire people with limited qualifications! I don’t see this as an incentive.

  • no sales tax

    “A second tax change in Dayton’s plan has some support within GOP ranks. It would allow the state to collect tax on items purchased over the Internet that are used and consumed in the state.”

    Every State that has tried this has failed once Amazon.com gets wind of their proposal. They’ve threatened to stop doing business in any State what would require them to collect sales tax, meaning if MN were to approve this we (Minnesotans) would no longer be able to purchase items via Amazon.com.

  • Bubba

    Where in this article does it say just by hiring Minnesotans that they would be unqualified or under qualified? An additional plus is these new hires will paying taxes instead of collecting unemployment. If these companies pay taxes overseas why don’t they move their whole company over there? Why, because the living conditions of freedoms we enjoy in the U.S. can’t compare. There would be no need for government interference if these companies would not be motivated by greed and hiding behind the mantra that it’s capitalism. It’s out and out greed.

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