The Minnesota Senate today approved a bipartisan $944 million tax bill aimed at jumpstarting the economy and helping workers and small business owners recover from COVID-19. The bill does not include any of the significant tax hikes proposed by Gov. Walz or Democrats in the House of Representatives, both of whom proposed raising taxes by over $1 billion, including the creation of a fifth-tier income tax. The bill passed with bipartisan support and is heading to Governor Walz’s desk for his approval.
“All year, the Senate Tax committee has focused on nimble, good tax and fiscal policies that empower Minnesota families and grow economic activity,” Senate Tax Committee Chairwoman Carla Nelson (R-Rochester) said. “Minnesotans should be thrilled this bipartisan legislation puts their needs first. This bill provides millions of dollars in tax relief, so individuals can keep more of their hard-earned dollars and provide a spark to our economy.”
“For the fifth year in a row, Senate Republicans have stopped harmful and excessive tax increases on Minnesotans,” Senate Majority Leader Paul Gazelka (R- East Gull Lake) said. “It makes no sense to raise taxes on hard-working families and small businesses after a year of sacrifice, and especially when state government turned surplus and received billions in stimulus funds from the federal government. We held strong against Gov. Walz demands and instead, delivered nearly a billion dollars in tax relief.”
The bill empowers Minnesotans and encourages economic growth with two top priorities for workers championed by Senate Republicans all year: full conformity to federal tax rules for the forgivable Paycheck Protection Program loans many businesses used to survive the COVID-19 pandemic, including deductions for expenses, and full conformity for federal pandemic unemployment benefits up to $10,200.
“There is simply no reason why we should ask folks to pay taxes on this emergency assistance,” Sen. Nelson added.“Businesses relied on these loans to keep people employed during the worst of the pandemic, and many of them are still struggling. Individuals were forced off the job through no fault of their own, and they depended on the extra unemployment to help make ends meet. Providing this protection is one of the most important things we can do to help employees and employers recover from pandemic-induced economic hardship.”
Job creators and business owners will see lower property taxes as a result of this bill. The bill also replenishes $491 million that was borrowed from the state budget reserve two years ago and provides relief to Minnesota contractors for their June accelerated sales tax payments.
Other highlights of the bill:
- Establishes with Frontline Worker Grant program working group to make recommendations on the disbursement of $250 million as a direct cash benefit to frontline workers. COVID relief funds from the federal government can be used to benefit those workers who were put at risk as they continued to work during the pandemic. The working group will be tasked with defining eligible workers and the matching benefit, which the full legislature will then adopt.
- Financial support for the Oriented Strand Board (OSB) project in Northern Minnesota. The OSB was recently approved to receive $15 million in funding from the Iron Range Resources And RehabilitationBoard and this crucial project will bring hundreds of direct and indirect jobs to the community.
- The bill extends the Angel Tax Credit by $5 million, which encourages investments in startup companies focused on high technology, new proprietary technology, and other groundbreaking fields.
- The bill extends the Historic Structure Rehabilitation Credit, the hugely successful job-creating tax credit that helps rehabilitate historic buildings. A study found that every $1 spent on the tax credit generates $9.50 in private sector economic activity.
- The bill emphasizes affordable housing and workforce housing with a new tax credit to bring private money into the marketplace.
- The bill provides annual aid payments to counties to address student homelessness.