Conforming state and federal tax code is a top priority for the House Taxes Committee this session, and the first bill related to federal conformity was discussed Tuesday.
Sponsored by Rep. Sarah Anderson (R-Plymouth), HF3162 would eliminate the state corporate alternative minimum tax — a supplemental income tax for corporations with exemptions allowing for lower payments of standard income tax.
It was amended to allow recognition of the credits that corporations already have in place then laid over for possible omnibus bill inclusion. Its companion, SF2526, sponsored by Sen. Ann Rest (DFL-New Hope), awaits action by the Senate Taxes Committee.
Anderson presented the bill as a fix to state and federal nonconformity, since the Tax Cuts and Jobs Act of 2017 removed corporate AMT at the federal level.
“If Minnesota were to keep the corporate AMT tax, it obviously would make it more challenging and difficult for businesses to file their taxes, which is opposite of what the intent was with the federal tax bill,” Anderson said.
Beth Kadoun, vice president of tax and fiscal policy for the Minnesota Chamber of Commerce, spoke in strong support of the bill.
“The corporate AMT does greatly increase the complexity of the tax system and we think this will be even more apparent if we continue Minnesota’s [tax] when the federal no longer has theirs,” Kadoun said. “The corporate AMT at the state level is based on a lot of the federal definitions. It uses the federal form to calculate Minnesota’s tax.”
Kadoun said retaining the alternative minimum tax at a state level would not only make filing more complicated for the Minnesota taxpayer, but also for the Department of Revenue when auditing the provision. Kadoun also pointed out that only eight other states still have a corporate alternative minimum tax calculation.
Lars Negstad, policy director of ISAIAH, spoke in opposition. Negsted said the organization, which works for racial and economic justice, was concerned about repealing corporate taxes following corporate tax cuts in federal legislation.
“We’re concerned what message the repeal of corporate taxes sends about our values, especially in a time of both great abundance and great need,” Negstad said.
The latest numbers are a $517 million swing from the November forecast
The state’s latest economic forecast projects a budget deficit of $188 million for the current two-year biennium, and a $586 million deficit for the 2020-21 biennium
The budget process explained — and why it matters