Small Business Won Several Defensive Victories in 2019 Session

Date: June 06, 2019

Incremental success on other issues

FOR IMMEDIATE RELEASE
Contact: Mike Hickey, Minnesota State Director, 651-235-7401, [email protected]

ST. PAUL, Minn., June 6, 2019—Small business achieved several major defensive victories in the recently adjourned legislative session of the Minnesota State Legislature, according to the state’s major small-business group, the National Federation of Independent Business (NFIB).

“If all of these negative proposals had been enacted, Minnesota would be a far worse place to start, own, or expand a business,” said NFIB State Director Mike Hickey, who thanked the Senate Majority Caucus, led by Sen. Majority Leader Paul Gazelka (Nisswa), for its strong and unwavering opposition to these many negative proposals.

Below is a list of negative proposals for employers that small business strongly opposed in the 2019 session:

  • Massive 70% gas tax increase. Gov. Tim Walz proposed, and the State House passed, a dramatic 20-cents a gallon increase in the gas tax, and worse yet, put it on autopilot so it increases incrementally every year with inflation.
  • The same bill rescinded $230 million per year for transportation that is being transferred from the general fund for this vital need. That is equivalent to a 6.8-cents-a-gallon gas tax increase! “This provision in the House bill is baffling,” said Hickey, “they are going backward in the amount of 6.8 cents before their large gas tax increase even raises any money! Minnesota should spend general funds on the vital need of transportation, and we should spend more of the current budget on this.”
  • An unrealistic $3 billion tax increase while the state is running a $1 billion surplus!  “There was no justification for the large tax increase pushed by the House and the governor, and thankfully were defeated,” said Hickey. Worst on the list was a large $176 million business property tax increase when we already have some of the highest business property taxes in the country.
  • Dramatic increase in the capital gains tax. Unbelievably, they sought to give Minnesota the highest capital gains tax rate in the country at 12.85% for those with incomes over $500,000. “This excessive taxation sends a very negative message to investors who may consider investing in small- and medium-sized companies in our state. It would also persuade more people to change residences,” said Hickey.
  • Rounding out the list of negative proposals that were defeated were an excessively expensive new paid family leave program that would have imposed a new tax on every worker and employer in the state; a drastic change to our sexual-harassment law that was not fair to employers; and a new mandated paid sick leave requirement that had no small business exemption.

Thanks to our friends in the Minnesota Senate Majority Caucus, none of these negative proposals even came close to becoming law.

Positive Progress

Hickey did note several positive incremental victories in the special session tax bill, including a $77 million reduction in business property taxes, effective fiscal years 2022-23.

The special session tax bill also made an incremental .25% reduction in Minnesota’s second income tax bracket, the first income tax cut in 20 years, and made a positive change in the special small business and farm estate tax exemption, making the current $5 million per person exemption more accessible to small business owners and farmers.

The big disappointment in the tax bill was only partial conformity on the critical section 179 expensing requirement. After both the House and the Senate passed full conformity, which allowed $1 million to be deducted per year, the special session tax bill re-imposed our current five-year, add-back requirement, meaning that only a $200,000 maximum or 20% can be deducted per year and the rest needs to be amortized over a five-year period. 

“It was extremely disappointing federal conformity could not be achieved when it was in both tax bills originally,” said Hickey.

Small business was also very encouraged when our critical reinsurance program that saved Minnesota’s individual health insurance market was re-authorized for two more years. NFIB gave the proposal strong support. “This proposal not only saved our individual market in 2017,” said Hickey, “but it also reduced premiums by 20% on the average in 2019 and provided a lot of relief and stability for people who are in this market.”

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For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit nfib.com.

NFIB Minnesota
380 Jackson St., Suite 780
St. Paul, MN 55101
651-293-1283
NFIB.com/MN
Twitter: @NFIB_MN

 

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