Taxpayers beware! The business lobby and the interest groups they bankroll are leading the charge to eliminate the state tax on business property (“Why it’s time to get rid of state’s general levy,” May 4).

This permanent giveaway would carve an $850 million hole in the state budget, during the first year alone. It would turn a healthy surplus into long-term deficits — and return Minnesota to the failed policies of the past.

Minnesotans deserve an honest tax bill that requires everyone to play by the same rules and pay their fair share. They need to know that the claims made in the business lobby’s commentary are misleading at best.

It is false to claim that “the state levy has grown about 40 percent faster than inflation.” Since 2002, property taxes on businesses have increased much less rapidly than property taxes on homes and farms. One of the major reasons is the state business property tax. Unlike local property taxes, which increased in real per capita dollars, the state property tax levy declined by 10 percent in real per-capita dollars since it took effect in 2002.

The claim that business property taxes are three times higher than that of homeowners is also misleading. This claim ignores the value of business equipment, fixtures and inventories — things that are exempt from taxation in Minnesota.

Claims that business property taxes in rural Minnesota are among “the highest … in the nation” also should be questioned. These claims overstate business property taxes in Minnesota relative to other states. They ignore state aid increases that reduced property taxes on existing commercial/industrial property in Greater Minnesota in each of the last two years. A study conducted by the Ernst & Young accounting firm indicates that business taxes in Minnesota, as a percentage of total state and local taxes, are below the national average.

It is odd for House Republicans to say that eliminating the state business property tax would be of particular benefit to rural Minnesota. The reality is that nearly two-thirds of the tax relief would flow to businesses in the seven-county metro area. On a per-capita basis, Greater Minnesota would receive a dollar of tax relief for every $1.62 that would go to the metro area.

Similarly bogus is the claim that this tax giveaway would “protect the integrity of local government finance.” The House Republicans’ proposal would do nothing to increase the ability of local governments to draw revenue from their business tax base; it would only provide massive tax relief to businesses with no corresponding benefit to local governments or owners of non-business property.

Why should the Legislature funnel a disproportionate share of property tax relief to businesses? Certainly, the tired drumbeat that “business tax cuts will translate into job growth” has been largely discredited at both the state and federal levels. The best way to grow jobs is to increase the purchasing power of lower- and middle-income families, who then will buy the goods and services that businesses produce.

Rather than giving a windfall of untargeted tax relief to businesses, state officials would do much better by increasing investments in public services and infrastructure and by providing tax relief directly to working families who truly need it.

Let’s help working families with tax credits for child care and early education. Let’s help unemployed veterans with a tax credit for businesses that hire them. Let’s help cities provide affordable housing so Greater Minnesota businesses can attract and retain the highly skilled workers they need. Let’s provide tax incentives so hardworking families can save for college. That’s how Minnesota can create an economy that works for everyone.

 

Eliot Seide is executive director of AFSCME Council 5.