Rep. Ryan Winkler: GOP alternative to Gov. Dayton's budget is higher property taxes

Commentary

Republicans would have us believe that Minnesota businesses are fleeing the state left and right because their taxes will go up under Gov. Mark Dayton's budget proposal.

In fact, Minnesota businesses should welcome the Dayton income tax plan, because the vast majority of them would pay less under Dayton's plan than under a Republican all-cuts budget.

Whether you agree with it or not, Dayton's budget is a complete and upfront solution to our state's $6.2 billion budget deficit. His plan includes both spending cuts and new revenue.

The new revenue is raised primarily through income tax increases on the wealthiest 5 percent of Minnesotans. He does not raise the corporate income tax rate.

This is a critical distinction. By focusing on personal income taxes, Dayton's plan greatly minimizes the pain that will be felt by Minnesota businesses small and large.

Minnesota businesses file taxes in a variety of different ways. Most small businesses file as S corporations, LLCs, partnerships or sole proprietors.

Of this small number, the businesses that do pay the top rate are heavily professional services such as lawyers and accountants -- not exactly the "mom and pop" business owners that Republicans would have you worry about.

Even for larger corporations, the only people affected in Dayton's proposal are CEOs and highly paid executives who would see higher individual income taxes.

These increases, however, should have no effect on whether these corporations remain in Minnesota. After all, corporations have a fiduciary obligation to their shareholders and cannot uproot their companies simply because their CEOs have to pay a little more in income taxes.

History bears this out.

Minnesota's income taxes have remained relatively static in national rankings, yet our business climate has remained competitive. Minnesota continues to hold more Fortune 500 companies per capita than any other state.

Perhaps the Republican myth-based rhetoric on taxes and business is meant to distract Minnesotans from an issue of far greater concern to Minnesota businesses -- property taxes.

Of all business taxes in Minnesota, 36 percent are in the form of property taxes -- more than four times greater than even the corporate income tax. This figure has continued to grow as property taxes soared the last eight years. While personal income tax rates remained constant, property taxes increased by more than 75 percent -- a $3 billion spike.

The governor's budget would protect Minnesota businesses from further property tax increases by maintaining local government aid. That's why local chambers of commerce across the state have voiced opposition to Republican cuts in aid that would undermine Main Street businesses.

While Republicans vehemently oppose tax increases that affect only wealthy Minnesotans, they have already proposed deep local aid cuts that guarantee property tax increases for businesses.

In their one-sixth budget solution that Dayton vetoed, nonpartisan analysis showed that business property taxes would increase by $80 million. The full all-cuts budget that Republicans have promised to deliver will include far greater property tax increases for Minnesota businesses.

Republicans prefer that all of us -- including every business in Minnesota -- pay higher property taxes.

Minnesota businesses should embrace the better choice for their own bottom lines -- the Dayton plan.