MN companies revolt over call to end tax-free business transactions
Posted in the Minneapolis Forum
#1 Feb 19, 2013
Minnesota businesses are blasting a plan by Democratic Gov. Mark Dayton to make the North Star State one of the few that taxes companies for business they do with other businesses.
Firms in the state say the plan to tax such business services as advertising, legal advice and even printer fees will dull their competitive edge, in addition to adding perhaps thousands in extra costs a year.
The proposed 5.5 percent tax would be imposed on business-to-business services. It's just part of a larger package of increases that Dayton has proposed to help trim the state’s $1.1 billion budget deficit.
Dayton supporters say the governor’s plan to also lower the corporate rate would help offset the new tax and stimulate economic growth.
But companies, particularly smaller businesses, think they’ll get hit in several ways.
They say larger companies can sidestep the tax by using in-house lawyers or marketing staff, instead of having to pay a nearly 6 percent premium on the money they would pay an outside firm. The smaller businesses say they don’t have that option and cannot absorb the additional costs as easily.
“We think it’s a horrible idea,” Dave Olson, president of the Minnesota Chamber of Commerce, told FoxNews.com .
Opponents have also argued that companies bidding on a New York company’s ad campaign, for example, could lose because the tax would add significantly to the price of their bids.
The Dayton administration said last week the tax would not apply to goods or services sold outside of Minnesota.
But the state Chamber of Commerce, which representing roughly 2,400 business, remains opposed to the tax and wary of the clarification.
“We’re still looking for the details,” Olson said.
Dayton originally projected the tax would raise an additional $2.2 billion, but his administration purportedly has acknowledged critics’ arguments that the number fails to take into account some companies figuring out how to avoid paying.
When announcing the broader tax plan – which also includes taxing the investment income of part-time residents – Dayton acknowledged the increases would sting.
"No one likes paying more taxes, even when necessary to make them fair," he said during his State of the State speech this month.
However, the changes -- which include lowering the state sales tax -- would make the system fairer, provide extra revenue to cut the deficit, fund education and provide homeowners with a tax rebate, he said.
Hawaii, New Mexico and South Dakota have been collecting sales taxes on professional services for decades. But the tax is rare. Florida passed similar legislation in 1987 but repealed it six months later amid a hail of criticism, according to The Star Tribune.
Olson said a state report due out next week is supposed to show better-than-expected revenue forecasts, which has some people thinking Dayton might pull back on the business tax.
“But I’ve been in this business a long time, so I don’t take anything for granted,” he said.“I think the governor has shown us the direction he wants to go.”
Read more: http://www.foxnews.com/politics/2013/02/19/mi...
#2 Feb 19, 2013
Isn't it true that this is the same Minnesota Chamber of Commerce that supported Dayton first. Typical leftist elitist tax everyone but me right, I hope they learn their lesson of why you don't dabble in leftist waters. Wishing for Governor Emmer, too bad
#3 Feb 19, 2013
Time for a recall election - Dayton has been listening to Obama too much. We can't tax our way out of the debt!
#4 Feb 19, 2013
We are in Nc ???
#5 Feb 19, 2013
I guess they will just print money at some point. Geez, Why did we vote the retards in? I mean would you trust someone like slew with your money, no then why the nations money?
#6 Feb 19, 2013
Faux News is you source? Couldn't find an unbiased source again, huh?
Saint Paul, MN
#7 Feb 20, 2013
Unlike Wisconsin, we can't recall for any reason we feel like. Dayton was elected, and much as I dislike that, he is our governor until the next election. These tax proposals will help to change Dayton's popularity, and drive him from office two years hence. When people lose their mortgage interest deductions in this session, you will see the house and senate turn over as well.
#8 Feb 20, 2013
Guy can't pick a stock or actually ever be correct, but you DO shake YOUR crystal ball well...
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