Conference committees in the Minnesota Legislature will be working to find compromise in very different tax bills approved by the DFL-controlled House and GOP-controlled Senate.
According to the National Federation of Independent Business (NFIB), the House bill proposes $3 billion in new spending despite Minnesota having a $1 billion budget surplus. The negative changes for businesses, NFIB said, include:
Increasing the state general property tax by $176 million in fiscal year 2022-23.
- Raising the gas tax by 20-cents per gallon, a 70 percent increase during the next four years, then imposing an automatic inflation adjustment for subsequent years.
- To conform with the new federal tax law, several deductions for pass-through small businesses were eliminated or trimmed. The bill raises $506 million in new taxes in fiscal year 2022–23.
- Imposing a 3 percent increase in the capital gains tax rate and creating a new top capital gains tax rate in Minnesota of 12.85 percent for those earning more than $500,000.
- Freezing the estate tax threshold at $2.7 million per person which was scheduled to go to $3 million in 2020.
NFIB said the Senate bill contains many positive provisions for small business but also includes the same federal conformity provisions that were in the House bill. Major provisions include:
- Sen. Eric Pratt placed the critical preemption measure in the Senate jobs bill. It preempts local units of government from passing minimum wages that are higher than the state wage and from enacting other new employment mandates on employers. It passed the previous legislature but was vetoed by Gov. Mark Dayton.
- The House wants to scrap the existing reinsurance plan, which has reduced individual health insurance premiums by 20 percent on average this year, and instead enact a 20 percent premium subsidy plan. It would reject the three-year federal waiver already approved by the Trump administration to provide significant subsidies to the current reinsurance plan and could cause dramatic premium increases similar to 2016-17. The federal waiver subsidies could be as much as $100 million per year although it is not a set amount and is based on enrollment numbers and insurer losses.