St. Paul) – Today, the Minnesota Senate approved a major Republican-led Economic Recovery Act with bipartisan support to help small businesses battling financial hardship caused by the coronavirus and the stay-home order. The $330 million bill emphasizes three elements that will benefit impacted businesses and their workers: liquidity to preserve cash flows, stability to give businesses some level of confidence moving forward, and recovery aid to help them push through the pandemic.

There are some very good, effective provisions in this bill. I would have preferred to pass a bill with many of our original goals for this year, including elimination of the social security income tax. We desperately need to quit taxing our seniors twice.  Unfortunately, our current circumstances were unforeseeable; the covid crisis has left us with a deficit and no ability to implement that and many other good policies. I am thankful that we were able to reduce the social security tax significantly in the last few years, including in 2017, when 297,000 taxpayers who qualified claimed the subtraction with the average benefit of $229.

Small businesses and workers continue to exist at the edge of financial survival, even with assistance programs. We need a stable economy and cash flowing through our state again, in order to rebuild our business landscape and retain jobs.

Small businesses struggling with cash flow due to the crisis will be able to keep more money on hand thanks to delayed tax payments for S-corporations, partnerships, and C-corporations; delayed installments of estimated tax payments; delayed accelerated sales tax payments, and delayed general statewide business property tax payments.

I am pleased that the bill provides full, retroactive conformity to Section 179 of the federal tax code, which will allow farmers and other small business owners to deduct large equipment purchases. I have advocated for this change for a long time, as it will increase the ability to invest and grow business.  In all times, and especially these, it’s imperative that people are not penalized for trying to succeed.

Additionally, more families with children in school will be eligible for the K-12 tax credit, thanks to a higher qualifying income threshold.

Other provisions in the bill include:

• A fairer school equalization aid formula, so districts with low property wealth will get more revenue
• An elimination of sunset and continued funding for the Angel Investment Tax Credit
• Charitable gaming tax relief to keep more tax dollars in local communities
• Making federal Paycheck Protection Program loans non-taxable on Minnesota taxes
• A reduced tax rate for low-income qualifying low-income class 4D rental property

Federal and state governments have already authorized extensions of income tax payments, sales and use tax payments, MinnesotaCare and Provider tax payments, and occupation taxes paid by mining companies.