\t\t\t\t\tDFL lawmakers are proposing a handful of bills this session targeting corporations.\t\t\t\t<\/p>\n
\t\t\tA recent exchange in a House committee hearing between DFL and Republican lawmakers over the role of capitalism illustrated a significant political question that dominates the debate over taxes and regulation: Are corporations good or bad? Are they positive to the state, or a drag?
\nBy both policy and rhetoric, DFL lawmakers and Gov. Tim Walz, have taken aim at big business and the wealthy as a centerpiece of their agenda. Attempts to change the tax code to get corporations to pay their \u201cfair share\u201d have been proposed, as was last year\u2019s change to the individual income tax that phased out deductions for high earners. And increased regulation meant to reign in what are seen as corporate excesses are also prominent in DFL-led committees.
\nThis year, two proposals have gotten most of the attention \u2014 a bill to require large corporations to disclose their state income tax filings and a cap on the number of single-family rental units a company can own. Investor-owned single-family housing is increasing in the U.S. and a\u00a0Minneapolis Federal Reserve study\u00a0reported that it makes up 3.4% of single family home ownership in the seven-county metro area. It\u2019s a trend seen nationwide.<\/p>\n
Rep. Esther Agbaje, a DFL member from Minneapolis, was asked last week by Republicans why she was pushing a bill that would cap at 10 the number of single-family homes one business entity \u2014 primarily corporations \u2014 could own. And if consolidation was a problem, why not apply it to non-profit housing providers?
\n\u201cThe issue with housing is that it is becoming much more commodified and housing is being used as a way to make profits,\u201d Agbaje told the House Judiciary and Public Safety Committee. \u201cIt is actually a necessity for people. It is where they live. It is where they take care of their families.\u201d But it is harder to find housing \u201cwhen a number of corporations see that property as a source of income for themselves whether the person living there has an increase of income on their own.\u201d
\nBut her defense of her bill was seen by GOP members as a criticism of capitalism itself.
\n\u201cThank you for clarifying the real philosophical difference at the heart of this,\u201d said Rep. Harry Niska, R-Ramsey, \u201cwhich is whether capitalism is a useful tool to encourage investment in things that are helpful to people.\u201d
\nResponded Rep. Leigh Finke, DFL-St. Paul: \u201cIt is a philosophical difference, Rep. Niska. Providing housing is what our side\u2019s philosophy is about. Not providing profits.\u201d
\nThis committee debate was about housing, specifically ownership of single-family homes. But corporations have been frequent rhetorical targets by Democrats nationally and in the state. After receiving an updated revenue forecast in February that saw increased tax collections driven heavily by higher corporate earnings, Walz was asked about DFL approaches to corporate taxation.
\n\u201cA study came out this week that said the average corporate tax rate in America is 5%,\u201d he said when asked about the state corporate franchise tax. \u201cWorkers who are caring for our children or caring for our seniors are paying 16%.\u201d
\nWalz said he considered it a myth to say the only way to attract business is with low taxes and pointed to the role taxes on corporate profits played in the better-than-expected revenue forecast. The tax treatment of corporations is at a proper balance, Walz said.<\/p>\n
\u201cI\u2019m not interested in raising corporate taxes, but I\u2019m not interested in cutting them either,\u201d he said.
\nThe conservative Tax Foundation now reports that Minnesota has the highest corporate tax rate among the states. But House Speaker Melissa Hortman frequently says that while the rate \u2014 what she calls the sticker price \u2014 is high, the rate after deductions is less striking.
\nMark Haveman, the executive director of the\u00a0Minnesota Center For Fiscal Excellence, said that Minnesota\u2019s largest corporate tax breaks are pretty common and that the state doesn\u2019t stand out for its generosity toward corporate taxpayers.
\n\u201cI would say Hortman\u2019s claim is accurate for individual income taxation, at least for some,\u201d Haveman said. Last year\u2019s tax bill phased out a set of deductions for high-earners, what Haveman calls a back-door fifth tier for top incomes that was proposed last year but not adopted.
\nA\u00a0recent study\u00a0found that Minnesota has the country\u2019s most-progressive tax system. Regarding corporate taxes, a\u00a0memo written\u00a0by Minnesota House Research estimated that while the state corporate franchise tax is 9.8%, the effective tax rate that factors in tax code subtractions, credits and deductions was 8.43% in 2021. That effective rate is up from 7.21% in 2019.
\nThe forecast led some DFLers to argue that corporate earnings are up not in spite of DFL policies but because of them. After hearing a briefing on the February forecast, House Taxes Chair Aisha Gomez said she is often accused of trying to jam corporations.
\n\u201cThis is, overall, a really good picture for our state,\u201d the Minneapolis DFLer said of the revenue report. \u201cWe have to push back against this assertion that we\u2019re being unfair to corporations by, for example, even having a corporate franchise tax.
\n\u201cWe have to engage on this issue,\u201d she said. \u201cThe value proposition of Minnesota is not that we\u2019re a no-tax, low-tax jurisdiction. It\u2019s not a place where you\u2019re going to benefit from our good workforce and the healthy environment and the investments in health care and housing and not pitch into the common good.\u201d
\nA batch of bills moving in the Legislature are aimed at making additional changes to how the state regulates corporations.<\/p>\n
Bills have also been introduced to regulate so-called junk fees and give farmers the right to repair their own equipment. An attorney general request to update state antitrust laws was not heard in either chamber. The Minnesota Legislature is considering several bills targeting corporations, including proposals to require large corporations to disclose their state income tax filings and to cap the number of single-family rental units a company can own. Rep. Esther Agbaje is pushing a bill that would cap the number of single-family homes one business entity can own, primarily corporations. Governor Tim Walz has stated that he is not interested in raising or cutting corporate taxes, but rather maintaining a proper balance. Minnesota has the highest corporate tax rate among the states, but the effective tax rate is lower due to deductions. Several bills are moving in the Legislature aimed at regulating corporations, including those related to single-family home ownership, tax transparency, hospital salaries, debt collection, corporate tax studies, health care acquisitions, and employee classification. Critics argue that the bills and underlying philosophy behind them are anti-business.<\/p>\n","protected":false},"author":6,"featured_media":8991,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[1521,2930,302,580,2149,6497,3492,209,186,6916,4844,4950,3385,1512,3348,5292,1793,5697,6267,5702,2536,2460,33,426,2577,5732,2144,1625,4767,4736,4498,4919,4061,4841,3399,5099,4758,898,5193,4117,2681,641,26,203,1312,1873,5596,2459,407,2515,52,2544,5576,4226,5098,3143,210,3895,156,2476,6654,2294,3398,1823,4638,2753,3752,28,4484,4770,3940,148,5527,2952,2257,7256,4434,4833,1004,4843,5838,1033,2847,3689,2247,4927,5402,284,5967,5279,287,3729,4768,4111,6468,4620,1022,1005,2871,6074,5612,2357,5614,1222,3771,827,817,7155,1358,1065,6860,4505,6544,4556,5680,5799,4185,5681,4738,1183,7191,618,1571,4861,1681,4870,4928,6305],"class_list":["post-8990","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-other","tag-1521","tag-antitrust","tag-art","tag-attorney-general","tag-ban","tag-benefit","tag-bill","tag-box","tag-business","tag-business-groups","tag-business-leaders","tag-buyers","tag-california","tag-cash","tag-change","tag-children","tag-coalition","tag-collection","tag-commerce","tag-committee","tag-communities","tag-community","tag-companies","tag-competition","tag-concerns","tag-conditions","tag-consortium","tag-construction","tag-corporate-franchise-tax","tag-corporate-profits","tag-corporate-tax","tag-corporate-tax-rate","tag-corporate-tax-rates","tag-corporate-taxation","tag-corporate-taxes","tag-corporations","tag-criticism","tag-debt","tag-decisions","tag-democrats","tag-disclosure","tag-earnings","tag-economy","tag-environment","tag-expansion","tag-fairness","tag-families","tag-family","tag-farmers","tag-february","tag-federal-reserve","tag-fees","tag-fine","tag-franchise-tax","tag-governor","tag-harry","tag-health","tag-hearing","tag-hospital","tag-hospitals","tag-housing","tag-income","tag-income-tax","tag-increase","tag-injured","tag-investment","tag-investments","tag-jobs","tag-labor","tag-large-corporations","tag-leaders","tag-local","tag-loss","tag-media","tag-meetings","tag-minnesota-legislature","tag-nelson","tag-policy","tag-power","tag-president","tag-price","tag-prices","tag-privacy","tag-private-equity","tag-profit","tag-progressive","tag-projects","tag-property","tag-public-safety","tag-questioning","tag-real-estate","tag-real-estate-investment","tag-rebates","tag-reign","tag-rental","tag-report","tag-republican","tag-republicans","tag-request","tag-research","tag-revenue","tag-revenue-forecast","tag-revenues","tag-safety","tag-salaries","tag-security","tag-social-media","tag-social-security","tag-support","tag-tax","tag-tax-bill","tag-tax-breaks","tag-tax-day","tag-tax-rate","tag-tax-rates","tag-tax-returns","tag-tax-revenues","tag-tax-system","tag-taxation","tag-taxes","tag-taxpayers","tag-top","tag-transparency","tag-treatment","tag-trust","tag-wages","tag-wealthy","tag-who"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\n
\n\u201cMaybe if your business is too big to fail, maybe it\u2019s too big to exist,\u201d Attorney General Keith Ellison said. \u201cEverything we\u2019re talking about is pro-competition. It\u2019s actually kind of conservative.\u201d
\nIn addition, Gomez held a hearing earlier in the session on corporate consolidation and mergers that she said make it harder for smaller businesses to compete. Anti-consolidation has been a focus of the Minnesota Farmers Union.
\n\u201cEvery community has an example of the impact of concentrated corporate power. It might be a closed hospital or factory, the loss of local retail jobs due to a new big box store or e-commerce giant or the loss of family farms because of powerful agribusiness companies, and more,\u201d wrote Justin Stofferahn, Antimonopoly Director of the farm group.
\nWalz tempers his rhetoric with frequent visits to ribbon cutting and expansion announcements. He also has been making a series of phone calls to corporate executives over the last several months \u2014 from Polaris and Winnebago to Medica and Aircorp Aviation.
\nWalz spokesperson Claire Lancaster said the meetings are mostly with small and medium-sized companies.
\n\u201cIt\u2019s part of an effort to get regular feedback from business leaders and encourage them to expand in Minnesota,\u201d she said.
\nMinority Republicans and business groups have pushed back on many of the bills \u2014 as well as what they see as the underlying philosophy behind them. During a hearing on the corporate tax return disclosure bill, Sen. Steve Drazkowski, R-Mazeppa, repeatedly asked Eric Harris Bernstein of the\u00a0We Make Minnesota\u00a0coalition \u2014 which represents labor and progressive religious organizations \u2014 if businesses had a right to privacy. After being unsatisfied with the answers, Drazkowski said, \u201cYou represent a radical consortium of unions and your contempt for corporations is very evident.\u201d
\nBernstein for a time included the quote on his social media bios.
\nDoug Loon, the president and CEO of the Minnesota Chamber of Commerce, said the rhetoric around corporations is a national political phenomena that groups like his try to counter.
\n\u201cThe reality is, business today requires lots of capital, and there are a lot of different ways that capital is brought together to create projects,\u201d Loon said. \u201cThe same thing applies to housing or child care facilities. Everything requires capital. The question is, does it come to Minnesota, does it stay in Minnesota, do we deploy it in our communities?
\n\u201cIf we are going to push away investment because our permitting process or our taxation or our regulation are overly burdensome, what\u2019s it going to do? Capital is mobile. You want to nurture that in a way that supports Minnesota, not just the private sector economy but supports Minnesota,\u201d Loon said. He was critical of the bill to require large corporations to disclose tax returns, calling it punitive and\u00a0 \u201cthe art of intimidation.\u201d It would cover about 4,500 tax returns.
\n\u201cAnd it sends a signal to businesses that want to move to Minnesota or do business in Minnesota that you\u2019re not trusted,\u201d Loon said. \u201cWe have to have trust. We have to support businesses, not vilify businesses.\u201d
\nMonday, legislative Republicans used Tax Day to call attention to tax and fee increases adopted last year and to again criticize DFL decisions to reduce the size of tax rebates and not eliminate taxes on Social Security in their entirety.
\nIn response to questions about this year\u2019s proposals, Rep. Greg Davids, the lead Republican on the House Taxes Committee, said he is running out of reasons to tell businesses why they should expand in the state, or even remain.
\n\u201cThe Legislature last year made it very tough because they\u2019ve taken away good arguments I used to have,\u201d the Preston lawmaker said. A regular feature of the Taxes Committee is Davids questioning anyone who complains that corporations and the wealthy are not paying their fair share.
\nThis story is brought to you by MinnPost.<\/em>
\n\u201cThe fair share is I\u2019m gonna take everything I can from you and that\u2019s fair,\u201d Davids said. (Here is\u00a0Rep. Greenman\u2019s answer\u00a0to one such inquiry.)
\nSen. Carla Nelson, R-Rochester, said she thinks higher corporate taxes do two things, both negative. First, they discourage location and expansion decisions in the state. Second, corporate franchise taxes are pass-through taxes. That is, they aren\u2019t paid by the company but instead result in lower wages for workers and higher prices for products.
\n\u201cTo say that corporations don\u2019t pay their fair share \u2014 which is a line we\u2019ve probably heard too much \u2014 assumes that they are not,\u201d Nelson said. \u201cWe have the highest tax rate, higher than California even. We should not be the top.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"