Editorial: Special session would do goodPublished 11:29am Monday, August 19, 2013
In a rush to raise revenue, the Legislature decided back in the spring to hit Minnesotans with several new taxes that make absolutely no sense. With a special session likely to take place in early September, lawmakers and the governor have an opportunity to repeal these ill-considered taxes.
Even the governor, who is presiding over massive tax increases, is in favor of repealing a new sales tax on farm equipment repairs. The tax, the governor’s office has said, was the result of a drafting error in the final, rushed effort to get legislative approval for new tax revenue. Although they may not have been the result of a drafting error, a law that would tax businesses for the use of warehousing and storage services was at least as big a mistake as the farm equipment repair sales tax. So is a tax on the repair and maintenance of business equipment.
The warehousing and business equipment taxes have many drawbacks. The first is that they are a clumsy attempt to disguise a general tax increase for all Minnesotans; businesses will be forced to pass their increased costs — estimated at $247 million annually — along to consumers. Even worse, any business considering expansion in Minnesota is going to think twice about operating in a state that has some of the most unique and punitive business taxes in the nation. Again, these are taxes that harm all Minnesotans, even if that harm will mostly be quiet and hidden.
We agree that there is a need to offset this lost revenue via either expense reductions or other tax increases. Consider the possibility that favorable revenue trends will more than compensate for any lost revenue. Finally, recognize that if only a couple of businesses forego expansions in Minnesota because of its tax structure, the state will end up losing money overall.
The fall is a great time to correct spring’s errors. We hope the governor and lawmakers can agree on these issues today, and set the date for a special session in September.