Minnesotans, get ready to open your pocketbooks. And we mean all Minnesotans. Gov. Mark Dayton and legislative leaders convened this year with a pledge to “tax the rich” and, in their words, place Minnesota on a path to prosperity.
As the 2013 session winds down, it’s become clear that nearly all Minnesotans fit their definition of “rich.” The proposed increases in spending (read: taxes) will hit small businesses like ours especially hard. The ripple effect of these additional taxes and fees on our businesses will inevitably extend to our employees and our customers.
In other words, all Minnesotans will be paying for our elected officials’ voracious appetite for spending. The entire state will be the poorer.
The governor and legislative leaders came to an agreement last weekend on a tax increase of $2 billion, with an additional $860 million in temporary tax increases. The biggest target is the personal income tax. Under their plan, single filers making $150,000, or joint filers earning $250,000, face a tax rate anywhere from 9 percent to 12 percent. That’s up from the current 7.85 percent and would place Minnesota’s tax rate anywhere from the second-highest to fourth-highest in the nation. The tax bite will be especially hard on the thousands of small and midsize businesses that file taxes as individuals.
Among other tax proposals:
• The statewide property tax levy will increase $140 million. This tax is assessed against commercial and industrial properties.
• A new property tax on utilities will result in higher customer costs.
• The governor’s original sales tax proposal on business-to-business transactions — though removed from his revised budget — is back on the table. Items subject to the tax include custom software, repair and maintenance of equipment, and warehouse and storage.
The tax-and-spend machine impacts businesses and consumers — all Minnesotans. Higher taxes or fees are proposed for companies that use large volumes of water. If you drive a vehicle, smoke or consume alcohol, be ready to pay more. The state also stands to rake in hundreds of millions of dollars through higher fees on Minnesotans’ everyday needs including driver’s licenses and auto and home insurance policies.
Don’t forget that the majority of these higher taxes and fees fund permanent spending. The taxing frenzy likely won’t end this year. There will be pressure to raise taxes in the future to sustain new programs and services.
More taxes and fees will only make it harder for all Minnesotans to make ends meet. Our economy is growing at 2 percent, yet legislators are proposing total spending increases of more than 7 percent and exceeding $2 billion. Elected officials don’t need more of our money. They just need to spend our money wisely.
Scott Gill is chief technical officer and owner of Nerdvana Solutions in Eagan. This commentary also was signed by Sanjay Kuba, DAK & Associates LLC (North Oaks); Rick Scott, Scott Builders Inc. (Buffalo); Dean Capra, Capra’s Sporting Goods (Blaine); Deb Brink, Sole Mates (Marshall); Pat Morstad, Precision Landscape & Irrigation LCC (Henning); Brent Prouty, Redwood Valley Real Estate Inc. (Redwood Falls); Jerry Poland, Poland Financial & Risk Management Inc. (Edina); Archie and Barb Linert, Linert Construction Inc. (Eagan); Patrick Foley, Foley Taxidermy Studio (Green Isle); Mark Piepho, Piepho Moving and Storage Mankato (Mankato), and Diane Vlach, Unity Property Management (Willmar).