SAINT PAUL (May 31, 2017): If it remains in effect, small business will be one of the big winners under the new tax law signed by Governor Dayton yesterday. However, the bill’s fate has yet to be determined thanks to the Governor’s actions to try to renegotiate the legislation and de-fund the legislature followed by lawmakers vowing to file a lawsuit. The plaintiffs are anticipated to ask the court to rule on the constitutionality of the Governor’s action to fully defund another branch of government.
“We are hopeful that the positive changes incorporated in this year’s tax law will remain after the legal conflict is resolved,” said Minnesota State Director for the National Federation of Independent Business (NFIB), Mike Hickey. “Thanks to the hard work of legislators, if enacted, this bill will bring substantial savings to Minnesota’s most vulnerable small businesses. The tax reduction will have a profound impact on small business owners and their ability to hire additional people.”
NFIB advocated for significant tax changes this year that were ultimately included in the bill, however, that reform is now in jeopardy. Under the new law, businesses with market values of $100,000 or less would receive a reduction in their property taxes of 20 to 30% while larger businesses will see a tax reduction to the tune of hundreds of dollars. Farmers will finally be provided with a 40% property tax credit on the portion of their bill that is attributable to school bond levies. However, NFIB, along with other business groups, had been advocating for Minnesota to match its estate tax exemption and Section 179 expensing threshold to the federal level for years and fell short this session.
“We were hoping the new tax law would go even further and address long-time federal conformity issues Minnesota has on critical issues for small businesses and farmers looking to pass on family enterprises or expand existing businesses,” continued Hickey. “Progress was certainly made with our property tax issues as well as repealing the automatic inflator provision on the state general tax. Unfortunately, Minnesota is politically gridlocked and not only did this year’s bill fall short for the small business community, whether or not any of the tax reductions will actually come to fruition remains to be determined.”