Minn. Senate Passes GOP Tax Relief Measures

ST. PAUL, Minn. (AP) — The Minnesota Senate voted Friday to reduce and eventually eliminate the state’s property tax on businesses and to give an income tax break to married couples.

The GOP-assembled tax relief package passed on a party line vote of 34-26, with backers calling the business tax cut the best way to stimulate job creation. The House has already approved its own version of a business tax cut. Both proposals differ strongly from Gov. Mark Dayton’s job creation approach, setting up a standoff between the Democratic governor and Republican legislative majorities over the best way to improve Minnesota’s job climate.

Both Dayton and Republican legislative leaders have called job creation the top priority of the session. But Dayton has proposed a different approach, seeking a mix of bonded construction projects with a direct tax credit to businesses that make new hires. His proposal has not won favor with Republicans.

The tax bill the Senate passed Friday opts instead for general tax relief. It directs about $30 million to begin reducing the state’s general levy on commercial and industrial property, paid by every business property owner in the state. The bill’s sponsor, Sen. Julianne Ortman, said leaving that money in the hands of the business owners would allow them to not just hire new employees but also put money into their properties and keep money in their communities.

“It’s a good investment,” said Ortman, R-Chanhassen.

The Senate tax bill directs another $70 million to altering the state’s income tax to remove a penalty that hits married couples who jointly file. Together the tax relief would cost the state about $100 million in lost tax revenue. Ortman would cover that by cutting state administrative costs and dipping into budget reserves.

Dayton sent Ortman a letter Friday saying he would not support that approach, pointing out that the tax revenue gap would continue to grow in future years, creating bigger deficits in the state general fund.

“I cannot support changes in revenues this year, which would add to the next biennium’s expected deficit and compound the problems the Legislature and I will face next year and for the foreseeable future,” Dayton said.

While the governor said he supports property tax relief, he said he wants it distributed more widely than just to business owners. Senate Democrats blasted the tax bill as poor fiscal management.

“If we’ve learned anything from the past few years, it’s that you have to pay for the spending you want to do,” said Sen. Rod Skoe, DFL-Clearbrook. “You can’t just keep adding it on to future deficits.”

The House passed a tax bill earlier this month that also begins to reduce the business property tax, though the lost revenue is covered by a different approach. Ortman said she and the House Taxes Committee chairman have already started discussing ways to bring their bills into alignment, and that they would welcome members of Dayton’s administration to engage as well.

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

  • Lonnie

    So, if the state is eliminateing this source of revenue, are they going to raise my residential property taxes to make up the difference ???

    • Old Nurse

      Business tax relief on the backs of the residents hurts the cities the most. The cities tend to vote DFL, . TIF has not generated overwhelming new business so why would this proposal?

    • Tango

      A fundamental difference: democrats believe the gov spending is a right and should go up every year, regardless of revenue intake, in a short fall, raise taxes. Republicans believe that gov should be trimmed to only essential services, and when revenue goes down, spending should go down.

      • Journeyone

        And when has that EVER happenned in the history of the GOP party? They spend and tax. Remember the GOP federally cut spending. That cut LGA for states who the MN GOP cut LGA to cities in Minnesota which trickled down and raised all of our property tax. Remember, a check mark next to the GOP in the voting booth is approving a tax increase for everyone. With NO BENEIFT to the middle class or the poor.

      • Tom

        @ Tango

        Even though is a state issue you seem to forget (Imagine that) that the GOP went on their own spending spree for 6 years from 2000 – 2006, or are the two wars, 3 Bush tax cuts paid for? There is no such thing as a fiscal conservatives. And Republicans claim they want smaller gov’t but isnt true either. The Republicans have never practiced what they preach! And we all know that taxes and revenue are dirty words in the Republicans mind.

        And by the way eliminating the property tax for a business will not create jobs. You can cut their taxes to zero and that won’t create jobs either.

  • Brett

    GITTER DONE!! So what, if ANY, pro-business proposals have the flaccid dfl offered up this session, except for the vikes stadium, which is really all about big dollar union jobs, which will result in bit kickbacks to dflers this fall??

    • Tom

      @ Brett

      Eliminatng property taxes for business will not create jobs!

      And to what the unions are for the DFL, Social Conservatives are for the GOP. Difference is unions believe in protecting rights while Social Conservatives believes in taking away rights!

  • james2

    My concern is that my property taxes will go out of the roof. Hennepin County already makes us pay the difference. Handouts. But can’t there be a different way to fund this?

    Is gentrification the plan here?

    • Tango

      do you mean “go *through* the roof”?

  • Economics 1001

    The larger the government, the more juice it sucks out of the private sector.

    To create jobs the size of government must be cut to allow a larger share of capitol back into the private sector.

    It ain’t rocket surgery.

  • June

    “If we’ve learned anything from the past few years, it’s that you have to pay for the spending you want to do,” said Sen. Rod Skoe, DFL-Clearbrook.

    Good one! A Democrat worried about fiscal responsibility. That is too funny!

    • michael

      well June, since reaganomics became their mantra the republicans don’t seem too worried about it either. Maybe that explains why we are in just dismal fiscal shape as a nation.

      • June

        The fault lies with liberals and Democrats.

        Republicans are bad but Democrats are much, much worse.

        -They do not have the ability to do math.
        -They do not understand basic economics.
        -They believe they are entitled to the wealth you create with your work.

        • Tom

          @ June

          You need to leave your bubble and quit watching FOX NEWS and listening to Conservative talk radio! You seem to forget that Bush was handed a surplus and he blew that quickly. Bush and the GOP went on a 6 year spending spree from 2000 – 2006 with their two wars, the bush tax cuts, etc. or did Bush and the GOP pay for that? No they didn’t. Bush didn’t put the two wars on the budget books! The GOP believes that tax cuts solve all problems. How did those 3 Bush tax cuts work out for you. Conservatives say that tax cuts create alot of jobs so if we went by that theory there should not have been a deep recession, but instead the GOP policies almost sent us over a cliff! So if the GOP is so much better at math how did that happen? Reagan had debt, Bush Sr gave us debt, Clinton gave us a surplus, and Bush Jr sent us in debt again. And it is funny how the GOP is not mad at the debt that Bush left they are more upset that Obama has added to it.

          • June

            Dear Bubble Boy,

            You are very confused, let me give you the facts.


            When Reagan was president, Tip O’Neil and his liberal buddies blew the budget out of the water.

            When Clinton was president, New Gingrich and his conservative buddies BALANCED the budget.

  • michael

    Wow, first we have the republican judicial activists insist that corporations are people and can exercise their free speech rights to buy our elections without any spending limits. Now we have the republican legislative activists insisting that these same “people” shouldn’t have to pay taxes on their property like us ordinary “flesh” people. Just wow, what a country.

  • Property Tax Reduction Services

    Oh this is such a great information. Thanks for sharing it.

  • rockford

    This would be the opposite of working on the economy. Can’t wait for November

  • Citizen

    Our county just mailed the property tax statements which include double-digit increases in the percentages–25% in our case. A predicted outcome of last year’s Republican-led intransigence on Minnesota’s budget and the revenue shifts. Local government units have to pay their bills, and, regardless of lower property valuations, the mill rate just goes up to provide the required tax revenue. The property owner cannot win. If businesses get rid of their property taxes, residential and agricultural property owners will just pay more. Mathematical laws at work: if you have the same amount of tax money needed and fewer people to pay that money, everyone will have to pay more.

    • Tango

      Local governments need to reduce services instead of raising taxes. Their bills are primarily “choices”…they are “choosing” to raise taxes. You are correct though the math is simple. If revenue goes down so should services. Simple as pie!

      • Whatever....

        Actually, Tango, you are very wrong. Businesses use a lot of financial maneuvering to maintain a cash flow: from jettisoning employees to taking out life insurance on employees, to raiding pension funds, etc. Hey, businesses even borrow money to take care of payroll during slack times. Government does the same thing in order to maintain services. Borrowing and incurring debt has been done by the federal government since the time of its beginning and is the basic way the federal government can finance wars. Or would you prefer the government confiscate all your income to finance a war? Because that is what happens when a government incurs an extreme cost like warfare. Or perhaps, if we can’t afford it, we should not wage war? Before you spout your naive, simplified answer to government spending, you should research exactly what government debt is used for. States use it for capital improvements such as roads, bridges, and buildings, or would it be better to just let everything deteriorate? Your beloved private businesses surely need those roads and infrastructure to keep business viable and paying taxes–so do you. The world is not so simple as the deficit hawks would like us to believe, and business and government both use credit to occasionally live beyond their means (just as you do when you take out a loan for a car or house). Time for a reality check.

      • Observer

        Simple is, as simple does. Your argument is a straw man.

  • truth hurts

    If a business pays less on property tax, there’s no guarantee that translates into more hires. OTH, if you get a property tax cut when you hire, you are more inclined to hire to get the tax break. That is true if a business main interest is paying less taxes.

    However, the business greatest expense is payroll and paying your workers less or having less workers is always the most desirable option. How does this bill address business desires to cut payroll?

    • Whatever....

      Doesn’t address business hires. Businesses hire when there is demand for goods and/or services. This bill does not encourage either of those in the sense that businesses will most likely just pocket the tax savings. In fact, if you take the long view (not popular with legislatures these days), this bill will probably hurt businesses in the long run because it will force increased property taxes onto homeowners who may well be forced to sell (just what we need more vacant properties, if those homes don’t sell), and ultimately starve tax revenue which in turn will starve infrastructure and state and local services which greatly benefit businesses. All anyone needs to do is look at this law like jello: if you push in one spot, another will bulge out, and there will be unintended consequences. In this case, homeowners can only absorb so many more increases in their tax burden and they will either revolt, or look for other living options. With so many boomers aging and changing housing options, increases in residential property taxes will introduce some nasty tax dynamics. Also, my farmer neighbors are reeling from property tax increases, not only because of the legislature’s stupidity last year, but also because farmland is now at almost $10,000 per acre in value in some places in Minnesota. $8,000 is almost a norm, anything less a bargain. What do you think this increased property tax valuation and bill will do to the price of small grains? Drive it up ever higher and change what farmers produce because they need to have money to pay taxes. Keep thinking about the ramifications of property tax increases and shifts, and it is truly scary.

      • Reality...

        Great to read you again!

        • Citizen

          Reality! You are still around. Unfortunately, for me I can only tolerate so much stupidity for so long, and the fact that this website is home to so many trolls brothers me in the sense that readers on this site probably think these trolls and their reactionary opinions reflect a constituency of some sort. So, I guess I am playing “Don Quixote!”

          • Reality...

            That’s fine with me, Quixote-on! —I was just glad to read your perpetual and consistent sanity that is undeniable regardless of “handle”. I still read CCO but end up gagging on it most often. So, to my surpise this morning—a familiar hand with common sense was a welcome surprise. Stick around, I can figure you out regardless of title.

            • Citizen

              For a while someone co-opted “Citizen” for whatever reason. I haven’t posted much, but property taxes are one of my personal push buttons. At one time I was part of a local (where I live) tax revolt trying to get the regressive property tax system eliminated and replaced. Even my local senator said it was possible to do this with a high enough and broad enough sales tax. Property tax is the most regressive tax there is. But, it does have its uses–one of which is to turn over property by taxing people out of their homes. Even if you invoke the over-65 property tax break, it just creates a lien against the property. As you get older and try to retire, you become very vulnerable financially as well as personally. You know all this. Sometimes when I take a hard look at the political and financial dialog in this country, I can only take heart that even millionaires and politicians will get old, get sick, and die, so there is no escaping destiny. I keep praying sanity will return to public discourse.

  • chester

    the only reason buisnesses hire is to increase productivity and demand for product property tax cuts for them WILL NOT CREATE JOBS just a bigger bonus for the CEO and middle class will fall closer to the poverty level

  • Murph

    When they get the courage to tackle subsistance wages for the majority of Americans ,less than that for many,vs the 1% feed bag of super rich over-endulgences.Give me a call will ya! Until then I will hate them all equally and vote for the smallest, less poisonest snake in the field!

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