Small Business Gets Big Win in Minimal Tax Bill

Small Business Gets Big Win in Minimal Tax Bill

Small Business Gets Big Win in Minimal Tax Bill

ST PAUL (May 24, 2016): The National Federation of Independent Business (NFIB) said today that small business was one of the big winners in the recently agreed to tax bill thanks to a reduction in the commercial property tax contained in the agreement. While the bill made significant progress on this issue it, unfortunately it did not address other key issues for small business and farmers such as conforming the estate tax exemption to the federal exemption, section 179 conformity for expensing and repealing the automatic inflator on the state general tax which pertains to business property. Despite that, NFIB is urging Governor Dayton to sign the bill into law. The following statement may be attributed to NFIB Minnesota state director, Mike Hickey:

The compromised tax package exempts commercial property from the first $100,000 of the state general tax and will be especially beneficial to many rural small businesses who own lower-valued property. We really appreciate this provision and it will be very helpful to many rural small businesses that own their property.  For someone who owns a $100,000 property or less, they will receive a 20-30% reduction in their property taxes in 2017.  Those with properties at $200,000 will receive about half that with the benefit reducing as property values increase.

Although this bill was not exactly what he was hoping for, we especially thank tax chair Rep Greg Davids (Preston) for all his efforts in trying to broker a significant tax package.

Notably absent is any progress on Minnesota’s estate tax exemption or section 179 conformity for equipment expensing.  These are critical issues that have been around a long time and we just can’t seem to make any progress on them.  The Senate majority leadership holds hearing on these bills but does not seem interested in voting for them on the Senate floor or agreeing to them in conference committee. Another year has gone by where we lack progress on these issues despite having a large surplus. Failure to act on the estate tax exemption, is not just bad tax policy for the small businesses and farms that are negatively affected by this, but also Minnesota runs the risk of losing wealthier individuals who spend winters away and may find it convenient to stay just a little longer to shield family assets from the bite of the estate tax.

New Metro Sales Tax Defeated!

NFIB metro members also strongly opposed the new proposed half cent sales tax increase to fund a significant expansion of excessively expensive light rail in the metro area and also the authorization of the expensive, problem-ridden Southwest Corridor light rail line.  If enacted, this would’ve established a blueprint for significant expansion of excessively expensive light rail that also requires large increasing subsidies in future years, and we applaud House majority members led by Speaker Kurt Daudt for standing strong and opposing this.

The metro sales tax increase would also raise the tax to an alarming 8.257% in the city of Minneapolis and would exasperate the competitive disadvantage traditional retailers and suppliers have with online sellers.  The higher this sales tax goes, the worse the competitive disadvantage. This is especially harmful to those who are selling big ticket items where the sales tax could mean hundreds of dollars more in the price.  There are far better ways to spend $900 million dollars of transit money, the state and local share for Southwest. That can buy a lot of new or improved bus service.