(The Center Square) – Proposal from Governor Tim Walz $ 52.4 billion The budget, which aims to raise taxes by $ 1.6 billion, prompted a multitude of corporations on Tuesday to both protest and support wages.
The budget is designed to pave the way for a COVID-19 recovery.
Walz aims to increase the corporate tax rate for profitable businesses from 9.8% to 11.25% from 2021 to reap $ 424 million, which would put Minnesota at 10.5%, the second highest corporate tax rate in the country after New Jersey .
Walz proposed a fifth tier income tax rate for household incomes over $ 1 million or a single earner bringing in $ 500,000 or more, removing Minnesota from the fifth highest income tax – 9.85% on taxable income over $ 164,400 per year – would be moved to the third level – highest.
Jessica Young, policy manager at the Medical Alley Association, argued that the tax hike would hurt the feasibility of businesses looking to expand or move to Minnesota.
“The major changes to both corporate and individual taxes are damaging competition,” said Young.
Approximately 34,400 C companies file corporate income tax returns in the state annually.
Beth Kadoun of the Minnesota Chamber of Commerce said lawmakers should follow a “do-no-harm” mantra to recover from COVID-19.
“We strongly oppose the governor’s tax proposals as they provide for permanent, uncompetitive tax increases of nearly $ 1.9 billion that would severely harm private sector employers while they continue to grapple with the effects of COVID- 19 pandemic, “Kadoun said.
Kadoun cited the Federal Reserve in 2018 study For every 1% increase in the corporate tax rate, employment in start-ups decreases by 3.7%.
The proposed budget includes a higher tax rate on capital gains: 1.5% on sales profits between $ 500,000 and $ 1 million and 4% on profits greater than $ 1 million.
AFSCME Council 5’s Max Hall supported the tax hikes that resulted in rich people paying their “fair share” and “expanding access to the American dream.”
The plan is to increase cigarette tax from $ 3.04 per pack to $ 4.04 and tax 35% of gross nicotine and electronic control device retail revenue at 95% of wholesale price.
The $ 1 per pack tax would skyrocket Minnesota near the highest cigarette taxes in the country among New York and Connecticut Igentax.com.
Dr. Michael Madden, a family doctor with over 30 years of public health experience, argued that tax policy would encourage cigarette smoking via vaping, the latter of which at least one study found 95% less harmful than smoking cigarettes.
“While it doesn’t reduce the risk to zero, harm reduction greatly increases safety and saves lives,” Madden said.
If enacted, cigarettes would be nearly 50% cheaper than e-cigarette cartridges, Madden said.
Monte Williams, an adviser to Altria, said 35% of cigarettes consumed in Minnesota are bought outside of the state and that tax hike would increase smuggling if cigarettes cost $ 3 less per pack.
The tax will land on 15% of Minnesotans, according to the Centers for Disease Control and Prevention, Williams said disproportionately Low income people.
Clearway Minnesota’s Molly Moilanen argued that rising nicotine prices would continue to drive smokers to quit, and urged lawmakers to spend more than the current 1% on smoking cessation programs.
Martha Njolomole, an economist at the Conservative Center for the American Experiment, argued that corporate tax hikes could push remote workers into lower-tax states.
Njolomole argued that Studies show that workers bear between 50% and 100% of the corporate tax burden, not corporations – so the increase is essentially another increase in income tax.
Tax increases don’t seem to lead to an increase in tax revenue, Njolomole said. For example, Minnesota tax revenue remained at 6.6% of the state’s gross domestic product from 1974 to 2019, although the income tax rate fluctuated between 8.5% in the 1990s and 17% in the 1970s.