Archive for the ‘Small Business’ Category
States are attempting to thwart President Obama’s and Sen. Reid’s plan to decimate small businesses, aka the government shutdown. They’re having mixed results:
The Arizona town of Tusayan, on the southern rim of the Grand Canyon, has 558 residents and 1,000 hotel rooms. And by Friday, it had $325,000 to reopen temporarily shuttered Grand Canyon National Park.
“The reason we exist is the Grand Canyon National Park. This closure is devastating,” said Greg Bryan, Tusayan’s mayor and the owner of a Best Western hotel. The town is offering to fund a partial reopening of the park that would allow visitors to drive through on a main road and stop at overlooks.
This week, Sen. Reid shot down the House bill that would’ve opened all national parks. In fact, he suggested that it was a gimmick. It isn’t. It’s the GOP’s attempt to not hurt small businesses. Something that’s undeniable is that Sen. Reid’s obstructionist tactics are hurting small businesses across the nation.
In Wisconsin, officials are keeping seven federally subsidized state-owned forest, wildlife and recreation areas open, even after receiving instructions from the federal Department of the Interior to close them. The state lands depend on federal funds for 18% of their budgets, or $701,000 total.
“I really don’t think it is a defiance, but fulfilling our obligations,” said Cathy Stepp, an official with the Wisconsin Department of Natural Resources, which administers the state properties. “We are doing everything we can with social media, radio outlets and news to get the word out that we’re open. The calls are coming in like crazy—people are planning to come here with camping trips every year, weddings, reunions.”
Wisconsin, thanks for keeping parks open rather than joining with President Obama and the Democratic Party in inflicting pain on American families.
This definitely caught my attention:
Lawmakers in Maryland have worked out a small exception to the federal shutdown to allow several hundred family members to honor firefighters who died in the line of duty at the National Fallen Firefighters Memorial in Emmitsburg, Md., this weekend.
Rep. Steny Hoyer (D., Md.) worked with the memorial, the Federal Emergency Management Agency and the U.S. Fire Administration to open the site briefly for the annual memorial service.
A spokeswoman for Gov. Martin O’Malley, a Democrat, said the brief opening didn’t present an additional cost. “They’re just unlocking the gate and allowing families of fallen firefighters to pay their respects at the memorial,” the spokeswoman said.
This is the history of the Obama administration and Democrats. They threatened to arrest World War II veterans trying to visit their memorial but they give special exemptions to Democratic allies like Steny Hoyer and Martin O’Malley.
In Arizona, the Grand Canyon State, the awe-inspiring attraction brings in millions of visitors every year and is an anchor of the state’s tourism industry, which last year accounted for $19 billion in spending and 7% of tax revenue, according to a state tourism report. The attraction creates 12,000 jobs, and tourists spend $1.2 million a day on businesses there, according to Rep. Ann Kirkpatrick, a Democrat who represents the district that includes the canyon, as well as seven national forests and other national parks.
Ms. Kirkpatrick said Friday she is continuing to negotiate on behalf of her district to try to reopen the Grand Canyon and other parks.
The Grand Canyon would be open if not for Sen. Reid’s insistence on hurting small businesses. He’ll attempt to explain away his refusal to fund the National Park Service by saying it’s part of his political strategy. That’s his option. Still, that doesn’t exempt him from criticism that he’s putting a higher priority on his political party’s political posturing than he’s putting on helping small businesses.
Most of the shops in and around the Grand Canyon are little mom and pop shops. Most can be run by a family. That’s who Sen. Reid and President Obama are hurting. Shame on them for needlessly tormenting these shopkeepers.
Technorati: Grand Canyon National Park, Small Businesses, Arizona, Tourism, John Boehner, World War II Memorial, World War II Veterans, GOP, Harry Reid, President Obama, Steny Hoyer, Martin O’Malley, Government Shutdown, National Park Service, Democrats
Appearing weaker by the day, Gov. Dayton is publically opposing the repeal of the warehousing services tax increase:
Dayton has said a repeal of the warehousing tax can wait until the 2014 session, because it doesn’t take effect until next April.
That’s a feeble argument. ‘It can wait because it won’t hurt businesses until April’ isn’t compelling, especially considering this information:
Dayton wants to call lawmakers back to St. Paul on Sept. 9 to approve disaster relief for 18 counties hit hard by storms in June. He said yesterday he also wants the special session to exempt farm equipment from a new tax on business equipment repair.
I’m fine with them not repealing the warehouse tax until next winter. The tax increase will be repealed. While it’s still on the books, though, it’s a constant reminder that Gov. Dayton’s and the Democrats’ highest priority is to raise taxes regardless of whether it hurts Minnesota’s economy.
Dayton and the Democrats that control the legislature worry more about raising taxes than they care about strengthening Minnesota’s economy. Cargill shipped 200 high-paying union jobs to Colorado. Red Wing Shoes is seriously considering building a $20,000,000 warehouse in Wisconsin as a direct result of Gov. Dayton’s warehouse tax.
It’s shocking that a governor would oppose repealing a tax that’s threatening to move dozens of jobs to Wisconsin on the basis that the tax won’t hurt a major employer until next April.
Chamber President David Olson’s letter asks for a repeal of the entire tax on business equipment repair, along with new taxes on warehousing services and equipment purchases by telecommunication providers. He said the taxes are hurting business and job growth.
“Business must plan ahead and these new taxes are already impacting their decisions,” Olson wrote. “We are aware of situations where expansion plans are now on hold or where companies are considering relocating some or all of their operations to other states.”
“Companies are considering relocating…operations to other states” is code for Red Wing Shoes, though it might include other companies, too.
Since gaining total control of the legislature, Democrats have weakened Minnesota’s economy with their foolish, counterproductive tax increases. They’ve put businesses in their crosshairs. They’ve paid off their special interest allies with illegal legislation that hurts Minnesota’s poorest families.
The Democratic Party in Minnesota is nothing if not finely attuned to their special interest allies. That’s why repealing foolish, counterproductive taxes isn’t their priority. That’s why we can’t afford another 2 years of their policies.
A federal judge dismissed 2 lawsuits in-home child care small businesses filed after Gov. Dayton signed the bill into law. Here’s part of what the judge wrote of the dismissal:
Chief Judge Michael Davis wrote the “plaintiffs express a fear that, one day, there may be a certified union for family child care providers who accept State subsidies and that, one day, such a union may decide to impose a fair share fee on nonmembers of the union… Plaintiffs request that the Court peer into a crystal ball, predict the future, and then opine on the constitutionality of a speculative scenario…Courts may not give such advisory opinions. Plaintiffs’ claims are not ripe.”
Gov. Dayton issued this statement on Judge Davis’ dismissal:
I am very pleased that both lawsuits seeking to prevent child care providers from deciding for themselves whether or not to form a union have been dismissed by the Chief Judge of the United States District Court. I believe that working men and women should have the right to vote on forming a union, and that the Court’s decisions will permit such an election to be held.
Gov. Dayton’s victory might be temporary. The judge didn’t say the small business leaders’ lawsuit was without merit. He simply said it wasn’t ripe. That’s something echoed by the plaintiffs’ attorney Doug Seaton:
He’s dismissed the case but he’s dismissed it on the basis that nothing is ripe, nothing has happened yet in his view. We think enough has happened so the judge can decide and he shouldn’t dismiss the case but because of that part of the decision it’s possible that our evaluation will be- we’re better off to wait until there’s a filing by AFSCME or some part of the process in the election takes place and then it’s very clear- it is ripe. So that would be one avenue to re-file after a matter of time and developments or directly go to the Eighth Circuit Court of Appeals to file an appeal of this decision.
Hollee Saville, one of the leaders of the anti-unionization fight, issued this statement on Judge Davis’ dismissal:
This is NOT over! We believe the Judge has erred and are considering our options to appeal or refile as the election process proceeds, but this challenge is not over. We remain convinced that home child care providers are not subject to unionization by the state under this statute.
Providers, PLEASE register to accept CCAP NOW so that you would get a vote.
We still need help adopting licensed family child care providers for mailings (any amount makes a difference) and will need help calling eligible voters soon, since we’re sure that AFSCME will present their 500 cards soon.
PLEASE visit www.MinnesotaFamilyChildcare.com to see how you can help.
At the heart of this fight is whether a legislature can write legislation that changes a private sector employer into a public sector employee without the employer’s consent. If the court rules that legislatures have that authority, then there’s nothing that legislatures couldn’t do.
As for Gov. Dayton’s statement, he’s intentionally omitting a pair of important points. First, legislatures shouldn’t have the right to call for a vote when existing federal legislation prohibits that vote. Also, legislatures shouldn’t have the right to write legislation that says private sector employers aren’t private sector employers. That’s what the DFL’s bill essentially does.
Finally, the DFL is playing with political fire with this issue. Anti-unionization activists are upset with the DFL for essentially throwing them under the bus to pay off the DFL’s political allies. The DFL stepped on a political landmine with this. Passing this legislation is motivating voters to vote against the DFL.
UPDATE: Here’s how Sen. Dave Thompson responded to last night’s child care ruling:
“On Sunday, July 28, 2013, The Honorable Michael Davis issued an order dismissing claims against Governor Mark Dayton pertaining to the childcare unionization legislation that was passed and signed into law during the 2013 legislative session. Of course, I am saddened by the decision, but am glad Judge Davis left the door open for the childcare providers to re-assert their claims at a later date.
“It is sad that these independent business people must work through the courts to try and stop the impact of this damaging law. This is what happens when elected officials put political interests ahead of the people. Governor Dayton and Democrats in the legislature have chosen to reward campaign contributors and union bosses while at the same time bullying childcare providers, most of whom are self-employed women.
“Rest assured if I am honored to be your next governor, I would make it a priority to repeal this ill advised and harmful law. This is an example of special interest politics at its worst, and Minnesotans should not stand for it.”
Here’s a quick quiz for voters: when was the last time the DFL didn’t side with their special interest allies?
Tags: Child Care Unionization, Mark Dayton, AFSCME, Mike Nelson, Corruption, Public Employees, PEUs, DFL, Hollee Saville, Doug Seaton, Small Businesses, Child Care Providers, CCAP, Federal Lawsuit, Michael Davis, Federal District Court, Dismissal
For months, we’ve heard the DFL, from Gov. Dayton and Speaker Thissen to DFL legislators, talk about taxing the rich because they hadn’t paid “their fair share” to support the DFL’s warped vision of government. Thanks to information included in Rep. Zach Dorholt’s e-letter update, we’ve got verification that the DFL just passed a massive tax increase on the middle class. Unfortunately, it’s mostly focused on small businesses. Here’s part of who’s getting victimized with the DFL’s middle class sales tax increases:
Commercial Equipment Repair:
Repairing and maintain electronic and precision equipment only if the service can be deducted as a business expense. Effective for sales made after June 30, 2013
TAXED if deducted as a business expense (purchased by a business), repair of the following items:
- cell phones, iPads, and similar devices
- computers, and everything that attaches to them like printers, monitors, and storage devices
- office equipment like photo copiers, scanners, and fax machines, CAD machines
- televisions, video and digital recorders and players
- communications equipment like two way radios, land line phones, and satellite dishes
- radar and sonar equipment
- medical and scientific equipment like microscopes, x-ray machines, etc.
Here’s another victim of the sales tax increase:
Commercial and Industrial Machinery and Equipment
Labor to repair or maintain commercial and industrial machinery and equipment is taxable, even when the equipment is installed into real property. This includes:
- refrigerators and freezers
- Farm machinery used in agricultural production (Note: The repair or maintenance is not taxable if farm machinery is owned for personal use.)
- Logging equipment
- Manufacturing and production equipment
- Mechanical cleaning equipment (floor sweepers, washers/scrubbers, etc.)
- Mining equipment
- Other heavy machinery (front end loaders, cranes, bulldozers, back hoes, skid steers, forklifts, etc.)
- Restaurant equipment
- Truck scales (portable and real property)
The DFL’s sales tax increases will hit tons of mom-and-pop shops. Repairing logging equipment will now get hit with the DFL’s sales tax increase. That hits the middle class hard. Tons of these loggers are small businesspeople making $35,000-$50,000. They aren’t rich by anyone’s definition. Repairs of cell phones, iPads, computers, and printers will now be taxed. How many people will get hit with that DFL tax increase? Perhaps hundreds of thousands? Certainly tens of thousands will get hit, with only a tiny percentage of them being “the rich.”
Unfortunately, the DFL’s victimization of Minnesotans doesn’t stop there. Here’s another group of people getting hit
with the DFL’s middle class tax increase:
Examples of taxable electronic and precision equipment repair and maintenance:
- Power tools and shop equipment
- Computer equipment
- Office security system
- Sprinkler system in a production building
The DFL’s tax increases hit every income group in the state. Everyone will get hit with the DFL’s tax increases. What’s worst is that the DFL’s tax increase is paying off the DFL’s special interest allies while giving the average Minnesotan less effective government, especially less effective schools.
Think about this: the DFL raised taxes on everyone while repealing the Basic Skills Test for teachers. That isn’t just a bad deal for Minnesotans financially. It’s a terrible shafting of students who need high quality teachers so they can compete with people in other states and around the world.
What’s pathetic is that Gov. Dayton signed the DFL middle class tax increase into law at the same time he signed the repeal of the Basic Skills Test. What’s most pathetic is that Gov. Dayton signed the DFL middle class tax increase into law at the same time he signed the repeal of the Basic Skills Test requirement that he’d signed into law in 2011.
Does Gov. Dayton do whatever the DFL’s special interest supporters tell him to do? That’s what it looks like. There certainly isn’t proof that he’s ever stood up to the DFL’s special interest supporters. We certainly don’t need a governor who resembles a potted plant. We need a governor who thinks things through and acts in the best interest of all Minnesotans, not just the DFL’s special interest supporters.
Finally, St. Cloud needs a legislator who’s willing to tell his party’s leadership he won’t vote for legislation that hurts middle class families. St. Cloud needs a legislator who doesn’t vote according to the DFL’s special interest supporters’ wishes.
Karen Cyson’s monthly op-ed is stunningly propagandist in nature. Here’s a sampling of Cyson’s propaganda:
The right to vote for representation was a catalyst for the American Revolution. It wasn’t until 124 years later, in 1920 with the passage of the 19th Amendment, that women were given that right.
How patronizing then that the current conflagration about a child care providers union isn’t about whether to form a union, but whether the providers be allowed to vote on whether to form a union.
That’s right. Another 93 years later, many in a mostly male Minnesota government are telling a mostly female profession, “Now, now, little lady. We know what’s best for you. Don’t you go worrying your pretty little head over this dang union thing.”
If Ms. Cyson didn’t have a history of spewing liberal propaganda, I’d be upset. The truth is that Ms. Cyson didn’t accidentally get her facts badly wrong on this issue. It’s that she’s lying through her teeth.
I watched about 4 hrs. of the debate on the House floor. Rep. Mike Nelson carried the bill for the DFL. Rep. Nelson is “a trades business agent for the Lakes and Plains Regional Council of Carpenters and Joiners.” In short, he’s belonged to a carpenters union for over 20 years. While I can’t find his voting record on union issues, I’m betting the ranch it’s 100%.
By comparison, the chief Republicans fighting against the DFL’s child care unionization legislation were Rep. Mary Franson, Rep. Sarah Anderson and Rep. Joyce Peppin. Rep. Franson, in fact, read from a legal study from the law firm of Seaton, Peters and Revnew that talks about the NLRA, aka the National Labor Relations Act. Here’s a quote from the NLRA:
Federal law mandates that it is an unfair labor practice for an employer to “…dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it…” 29 U.S.C. 158 (a)(2)
One of the highlights of the child care debate came after Rep. Nelson said for the umpteenth time that the BMS, aka the Bureau of Mediation Services, “has been doing these elections for 40 years and they’ve been doing a fine job.” That’s when Rep. Anderson asked Rep. Nelson if the BMS had ever been audited. He admitted he didn’t know, at which point Rep. Anderson asked “Then how do you know that they’ve been doing a fine job?”
At another key point, Rep. Nelson argued against an amendment on the font size of the print on the mailer sent to child care providers. He held up a mailer that met the requirements of the amendment. Minutes later, Rep. Peppin introduced a mailer she’d gotten from the child care providers still outside the House floor at 4:05 am. Rep. Peppin showed that this mailer had lots of fine print that was difficult to read.
That’s before talking about Hollee Saville, the leader of the opposition to the DFL’s child care unionization efforts. Saying that Hollee is well-informed on this issue is understatement. She’s the heart and soul of the leadership that’s trying to defeat this illegal effort.
That’s before talking about the dozens of women outside the House floor who oppose the legislation. They outnumbered the pro-union child care advocates by a wide margin.
Ms. Cyson’s statement that an all-male gang of legislators told the women that they “know what’s best for you. Don’t you go worrying your pretty little head over this dang union thing” is pure bullshit. In fact, the DFL told the women child care providers that they knew best of how to run their child care small businessses. They did it by having Rep. Nelson, a pro-union man, repeatedly say that the “BMS has been doing these elections for 40 years and have been doing a fine job.”
That’s proof positive that the DFL, not a bunch of know-it-all men, told the women who run child chare small businesses they the DFL knows what’s best for these women. The DFL essentially said that these female entrepreneurs shouldn’t “worry their pretty little heads” about unionization.
Finally, Rep. Nelson admitted in an interview on WCCO radio that this was a payoff to AFSCME:
Thankfully, this legislation will be defeated in the federal court system. The NLRA is quite clear that it doesn’t allow business owners to “dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it.” Further, governments can’t say that private sector business owners are public sector union employees just because it says so.
Ms. Cyson should pay attention to the laws on the books. She shouldn’t be ignoring the ones she doesn’t like.
The day after the session ended, the GOP and DFL took flight to give people their take on the session. As is tradition, the DFL bragged about all the great things they did while the GOP talked about the destruction that the DFL did. This chart shows how much people will get hurt from the DFL tax increase:
While it’s true “the rich” will get hardest initially, the reality is that the tax increased levied at them will be paid by their customers. “The rich”, aka small businesses, will pay an additional $1.13 billion. Meanwhile, other employers will pay an additional $424,000,000. The middle class tax increases totals an additional $600,000,000.
At a time when middle class wages are stagnant, the DFL chose to burden the middle class with a significant tax increase. Of course, they’ll dispute that but that’s reality.
This year’s session will be known for its tax increases. Passing gay marriage will be characterized as historic but that isn’t what the average Minnesotan was thinking about. They’ve been hoping that the economy would start growing again. The DFL’s tax increase won’t help create jobs.
The business owners I’ve spoken with have said that they’re expecting job growth to level off. They aren’t expecting a big increase in unemployment, just a sharp decline in job growth.
The other thing they’re expecting is to see businesses leaving the state or expanding in other states rather than expanding in Minnesota.
The harsh reality is that the DFL’s budget grows government, not the economy. When government grows, economies either shrink or their growth slows significantly. Apparently, the DFL hasn’t figured that out.
Tuesday morning, GOP legislators, led by House Minority Leader Kurt Daudt and Senate Minority Leader David Hann, visited the St. Cloud Regional Airport to discuss the just-ended session. After brief presentations by Daudt and Hann, they opened things up for questions.
Rep. Daudt first noted that the DFL legislature raised taxes by “$2.1 billion” and fees by another $300,000,000. Sen. Hann and Rep. Daudt both talked about not needing that tax increase to solve a $627,000,000 deficit. Both legislators spoke about the need to spend money more wisely, with Sen. Hann noting that the DFL didn’t include any reforms in their budget or policy bills.
When asked about the $400,000,000 in property tax relief, Rep. Jennifer Loon verified that most of the relief came in the form of increased payments to cities and counties. When asked if LGA payment increases helped cities like Duluth, St. Paul and Minneapolis just spend more rather than provide property tax relief, Sen. Hann and Rep. Daudt said that there’s a history of that. Adding to that, Sen. John Pederson said that, while the DFL was screaming about people’s property taxes going up, St. Cloud’s property taxes were actually going down.
Another piece of legislation that was brought up was the energy bill. The bill passed in the House but, ultimately, it didn’t pass in the Senate. Still, it’s almost a guarantee that the DFL will bring it up early in 2014. Sen. Pederson said that one of the Senate DFL’s selling points for the legislation was that it would lower electric rates. Republicans questioned that talking point by asking why northern Minnesota needed the carve-out if their rates were dropping.
The most chilling part of the press conference was hearing Teresa Bohnen, the president of the St. Cloud Chamber of Commerce talk about how businesses are hurting and that the tax bill won’t help with that. Afterwards, Rep. Daudt said that businesses are planning ahead for the tax increases. He then said that that’s why job growth is slowing down. Rep. Daudt said that we won’t see a spike in unemployment but that we’re likely to see job creation stagnate.
The other point they made was that, while the middle class won’t get directly hit with tax increases, the middle class will get hit with higher priced products as a result of the tax increases on “the rich.” Rep. Jeff Howe said that the warehousing tax will trigger higher prices, adding that that tax increase “wasn’t well thought out.”
It’s no longer debatable whether the DFL hates business. They certainly hate entrepreneurs. Rep. Ryan Winkler’s minimum wage legislation is the ultimate combination of nanny-statism and heavyhanded government:
The Minnesota House likely will approve a minimum wage increase later this week, after a committee Monday expanded the bill’s reach by doubling state-required parental leave for a new child.
Under the amended measure by Rep Ryan Winkler, DFL-Golden Valley, employers would be required to grant 12-week leaves after a birth or adoption.
The House Ways and Means Committee tacked the provision onto Winkler’s bill that aims to raise the minimum wage to $9.50 an hour in 2015 from today’s $6.15. Then the wage would automatically increase.
Why would employers do business in a state that requires 12 weeks of maternity leave? For an employer, that means an extra 6 weeks of doing without an employee. That’s almost a fourth of the year without an employee. This is nanny-statism that’d make Michael Bloomberg proud.
That’s before talking about raising the minimum wage by almost 50% in 3 years. To cover the cost of higher wages, they’ll hire fewer people. Rep. Winkler should rename his legislation the ‘Growing the Nanny State and Killing Jobs bill’ because that’s what this bill will do.
A few weeks ago, Rep. Winkler tried spinning his legislation by saying that raising the minimum wage doesn’t hurt employment. At the time, I argued that that isn’t accurate. It’s true that raising the minimum wage doesn’t always hurt employment. It’s equally true that there are times, like during a weak economy, when raising the minimum wage kills jobs.
Businesses that are having trouble making money simply won’t hire people if the cost of wages increases. When the increased minimum wage is increased dramatically, like what’s being done in Rep. Winkler’s legislation the hiring freeze is that much more dramatic.
Further, employers seeking to expand will cross Minnesota off their list of destinations when they see this level of regulation and overbearing government. Business starts will shrink. Mitch’s post shows that people are already leaving Minnesota:
Though data can deliver mixed messages, data from the Internal Revenue Service (IRS) point to one clear and worrisome fact: Minnesotans and their wealth are moving to Southern and Western states. Between 1995 and 2010, an average of $340 million in income—based on 2010 dollars—moved each year from Minnesota to other states—a movement totaling more than $5 billion over 15 years. The states that on net receive the most Minnesota income tend to be low tax states such as Arizona, Colorado, Florida, Georgia, Nevada, South Dakota, Texas, and Washington.
It pains me to say this but it’s got to be said: Minnesota isn’t special anymore. The lakes are still beautiful. The woods are still picturesque. The regulatory burden is excessive. Do-gooder organizations like Conservation Minnesota are attempting to kill industry in northern Minnesota. Tax rates are confiscatory. The special interests, aka AFSCME, MAPE and ABM, run the DFL. They say jump. The DFL asks ‘off what’?
Sacred cows abound within the budget. Bills pass through this legislature because we have to ‘invest in higher education’ or all-day Pre-K or whatever else the special interests demand of the DFL.
It’s time for the DFL to wake up to the fact that they’ve reached a breaking point on excessive taxation, irresponsible spending and overregulation. These statistics prove that people are voting with their mortgages (and their feet) on what’s excessive.
These paragraphs are a stinging indictment of Rep. Winkler’s bill:
Republicans and business leaders generally said the higher wage would hurt Minnesota firms. “There is no capacity on Main Street to absorb any more expense,” Rep. Jim Abeler, R-Anoka, said.
Rep. Bud Nornes, R-Fergus Falls, said he talked to a restaurateur who makes $60,000 profit a year. The new minimum wage requirement would cost him $60,000, Nornes said. “Why should he stay in business?” Nornes asked. “We’re going to lose some.”
As damning as that information is, and it’s plenty damning, it’s nothing compared with this admission:
However, Rep. Tim Mahoney, DFL-St. Paul, added: “It is a small number of businesses that will be hurt.”
Isn’t that reassuring. It’s only a few businesses that will get hurt. I’m sure that’ll ease those businesses’ minds.
The DFL can argue all it wants but capital flight from Minnesota exists. It’s just that the delusional idiots running the DFL think it doesn’t exist. In the end, reality trumps theory.
At the start of this session, I said that the DFL would sail through because Alida Messinger would give them their marching orders. When Gov. Dayton introduced his bill, businesses far and wide criticized it for imposing a sales tax on transactions between businesses and lawyers, accountants and other service providers. When the House DFL introduced their tax bill, it was criticized for imposing a gigantic, disastrous income tax increase, raising the top income tax rate from 7.85% to 12.49%. It’s difficult to imagine how the Senate DFL’s tax bill could be worse.
Difficult but no longer impossible:
Democrats in the state Senate released a plan today that increases income taxes on wealthiest 6 percent of Minnesotans, raises the sales tax on clothing and services, and increases the cigarette tax.
Republicans don’t like it and even some Democrats in competitive districts are uneasy about the taxes and spending. But DFL leaders say the $1.8 billion dollar tax increase is needed to erase the state’s budget deficit and increase spending for schools and property tax relief.
It’s incredible that the Senate DFL took the worst part of Gov. Dayton’s tax proposal, the sales tax increase on services, watered down the worst part of the House DFL’s tax increase, then added their own terrible wrinkle by raising income taxes on the middle class.
While Senate DFL leaders praise the bill as good tax policy, some of their rank-and-file members remain apprehensive about it.
“This is going to be a hard one for me to support,” said first-term DFL Sen. Melisa Franzen. Franzen, who represents the swing district of Edina, Minnetonka and Bloomington, worries the bill could harm the state’s business climate.
“If the cost of doing business in Minnesota is going to rise and small business is going to be impacted, that is something that I have to take into account,” Franzen said.
Sen. Greg Clausen, DFL-Apple Valley, worries about the income tax portion of the bill, but said he thinks many of his constituents could live with it since the bulk of the extra spending is dedicated to education.
“There certainly are people out there that say ‘no new taxes.’ Whenever they see a tax they don’t support that,” Clausen said. “But I think there is also a group of people who recognize that there are needs in our state.”
First, Sen. Rest is wrong that the Senate bill is “good tax policy.” It isn’t good tax policy raising the cigarette tax because it’ll significantly hurt convenience stores while cutting cigarette tax revenues without reducing smoking.
Hurting retailers and Minnesota’s general fund while doing nothing to tamp down smoking is a nasty negative trifecta of tax policy.
Second, there’s no way the cost of doing business in Minnesota doesn’t increase. Businesses will get hit with higher income taxes & higher business costs thanks to the sales taxes on services. That’s before talking about how the cigarette tax increase will hurt convenience store sales.
If the DFL doesn’t pull its act together quickly, they’ll find lots of complaints on the campaign trail next year.
This Strib/DFL hit piece is what I’ve been expecting considering the infighting between Ann Lenczewski and Tom Bakk over their tax increase bills. Here’s the lede in Neal St. Anthony’s Strib article:
Regardless, businesspeople aren’t united on these issues. Case in point: Even “United for Jobs” members are lobbying for increased funding for their favorite causes or to retain their tax breaks.
And not every businessperson opposes a tax hike if Dayton can make the case.
“An increase in the marginal income tax rate would have no affect on our business or whether to expand,” said Harvey Zuckman, 62, executive vice president and an owner of Minneapolis-based FirstTech, who also is president of the Twin Cities Metro Independent Business Alliance.
“Our hiring decisions are based on consumer demand and revenue. I put the question to our MetroIBA members and a number had a similar response.”
By St. Anthony’s standards, anything short of unanimity of opinion equals division within the anti-tax increase ranks. It didn’t occur to St. Anthony that there are lots of disagreements within the business community. Apparently, St. Anthony isn’t too sharp on DFL tax increase history. Apparently, St. Anthony doesn’t know about this DFL tax increase disaster. Similarly, St. Anthony isn’t aware of Gene Pelowski’s opposition to Rep. Lenczewski’s 2009 ‘tax reform’ legislation:
Pelowski said lawmakers won’t have enough votes to override a Pawlenty veto of a DFL tax plan, and said the proposals are a “fiction” that will force lawmakers to scramble to craft another budget proposal after Pawlenty’s veto. “We have to do what is real and not go through an exercise of what-ifs,” Pelowski said. “There are no what-ifs. There is only the stark reality of this budget deficit.”
This year’s fight within the DFL on the differing tax increase proposals isn’t something unanticipated. Here’s a post I wrote about the infighting within the DFL over Rep. Lenczewski’s ‘tax reform’ proposal from 2009:
“This bill proposes the most significant tax overhaul in 20 years,” said the bill’s chief author Rep. Ann Lenczeswki, DFL-Bloomington.
In addition to the tax hikes, Lenczewski’s bill removes a variety of tax breaks for homeowners and businesses. Charitable contributions, the mortgage interest tax deduction and the property tax deduction for homeowners are eliminated and replaced with a tax credit based on income. The bill also eliminates several business tax breaks, like the Research and Development credit and parts of the governor’s JOBZ program.
Lenczewski said she wants to clean up the state’s tax code. “Which is to sweep the tax code clean of all of the preferential treatment and subsidies and things we can’t afford anymore and instead bring a fairer, more progressive income tax to Minnesotans based on the ability to pay,” she said.
Here’s Sen. Bakk’s response to Rep. Lenczewski’s proposed tax increase:
Senate Taxes Committee Chairman Tom Bakk, DFL-Cook, said eliminating the current mortgage interest deduction could hurt Minnesota’s high rate of home ownership and higher alcohol taxes would drive some liquor shoppers across the Wisconsin border.
Simply put, the DFL has been split on which taxes should get increased for years. The notion that the business community is hopelessly split in its opposition to Gov. Dayton’s tax increases is DFL spin.
Convenience store operators think that raising the cigarette tax will hurt their retail outlets. What’s more, they can verify the fact that the DFL’s cigarette tax increase will hurt their businesses.
With regards to the Dayton/DFL income tax increase on “the rich”, Teresa Bohnen really has talked with 4 different companies who will likely expand their companies in other states:
St. Cloud Area Chamber of Commerce President Teresa Bohen says she’s recently talked with four local companies who say they may have to transfer their investments to other states, if the Governor’s plan goes through.
Most important in this is whether the Dayton-DFL tax increases will hurt Minnesota’s economy, strengthen Minnesota’s economy or cause Minnesota’s economy to tread water, gaining a little hear, hurting a little there.
What’s most likely to happen as a result of the Dayton-DFL tax increase is that convenience stores will get hurt, some businesses that were started in Minnesota will expand in other states while other businesses won’t be affected by the tax increases. In other words, the best Minnesota should hope for from the Dayton-DFL tax increase is for Minnesota’s economy to continue treading water.
That’s unacceptable. Then again, that’s what doesn’t get reported when the Strib writes articles that could pass for DFL press releases.
Tags: Ann Lenczewski, Tax Reform, Tom Bakk, Mortgage Interest Tax Deduction, Mark Dayton, Tax Increases, Cigarette Tax, Liquor Tax, Unemployment, Economic Stagnation, Outmigration, Convenience Stores, Gene Pelowski, DFL, Teresa Bohnen, St. Cloud Chamber of Commerce Small Businesses, Capitalism