Chamber is right: It's an opportune time
Dollars don't fall from the sky. Nor do they grow on trees.
That's why we agree with the Minnesota Chamber of Commerce, which seeks to take advantage of a unique windfall to benefit Minnesota residents, Minnesota businesses and Minnesota's efforts at economic development.
Saturday, the Herald published a question-and-answer segment based on a meeting with Jim Pumarlo, communications director for the Minnesota Chamber of Commerce. Pumarlo discussed an initiative by the group to reduce the state's corporate tax by 1 percent, from 9.8 to 8.8 percent. At present, Minnesota has the third highest corporate tax in the nation, behind only Iowa (12 percent) and Pennsylvania (9.99 percent).
That high ranking not only affects the bottom line of thousands of businesses, but also hinders Minnesota's chances at attracting — or keeping — businesses that could easily go elsewhere.
For instance, when Pumarlo spoke to the Herald, he was flanked by three business leaders with East Grand Forks connections.
One was Matt Walkowiak, past board chairman of the Grand Forks/East Grand Forks Chamber of Commerce. He said variances between states like North Dakota and Minnesota are obvious, and hurt Minnesota's business community.
Dave Zavoral from Zavoral Construction in East Grand Forks said Minnesota's tax code makes it difficult to compete.
"We lose out to businesses on the other side of the border who don't play on that field," he said. "It's definitely a burden for us."
Lisa Mangino Swanson, communications director for Hugo's Family Marketplace, said that "if there is anything in the tax structure that can be eased on the Minnesota side, obviously that helps move decisions forward faster. ... I think most businesses would agree with that. We want to offer what we can in wages and benefits. We're committed to doing that. Some help on the Minnesota site would definitely be appreciated."
But — eureka! — an opportunity has arisen. After Republican-backed federal tax reform passed last year, more money exists in many Minnesota pocketbooks. Also, there is a $329 million state budget surplus.
That means now is an opportune time to reduce Minnesota's tax code, Pumarlo said, and the impact shouldn't be too great. For example, he said a 1 percent reduction in the Minnesota corporate tax would account for about $110 million annually; when compared to a $46 billion biennial budget, he said "the impact is miniscule." The Minnesota Chamber of Commerce also suggests reducing the individual tax rate by three-tenths to one half of 1 percent.
It will take legislators to push it through, however, and final approval from Gov. Mark Dayton.
And what would Minnesota get in return?
Potentially, it would get a more level playing field when recruiting businesses; more money circulating through the veins of the private sector; and a more favorable ranking on a national level.
This sounds like a good idea and we hope it gets traction this legislative session.