Call made for early-session tax repeal

With money projected to be on the General Fund’s bottom line this biennium, the House Taxes Committee is quickly pushing forward bills to address some highly contentious business-related taxes enacted last session.

Additionally, Committee Chair Rep. Ann Lenczewski (DFL-Bloomington) is anxious to see Minnesota taxpayers benefit by conforming the state’s tax code to federal provisions.

The committee Tuesday heard 25 bills that address tax conformity and repeal of several business-to-business taxes. All were held over for further committee consideration — a move that is not unusual for the committee, where omnibus bills are the rule, rather than the exception.

Lenczewski sponsors HF1777, which contains most of the provisions heard. She said the bill will be the working document for the committee and should line up with a companion to be sponsored by Sen. Rod Skoe (DFL-Clearbrook), chair of the Senate Taxes Committee.

Lenczewski would like to see early action especially on federal conformity, because people are in the process of filing their tax returns.

“I understand the time crunch,” she said. “Generally if there can be an early tax bill, there is broad agreement on the provisions. I would hope that we can get there very quickly.”

Rep. Kurt Zellers (R-Maple Grove) commended her for bringing back to the table the controversial business tax increases.

“These were bad ideas. I give you a lot of credit for allowing people to come forward. I encourage you to work with the other body to get this done,” he said.

Federal conformity provisions, some retroactive to 2013 and others effective for the 2014 tax year, that would be addressed include:

• an increase in the standard deduction for married filers;

• increased expense limits for the dependent care credit;

• a 15-year straight-line deprecation for qualified businesses; and

• an exclusion for employer-provided adoption assistance.

Among the business-to-business taxes proposed to be repealed are:

• qualified equipment repair, including farm equipment

• storage and warehousing services, (a tax scheduled to take effect April 1, 2014); and

• capital equipment used in providing telecommunication and pay television services.

As amended, the General Fund current biennial cost of HF1777 would be approximately $514 million and jump to $641 million in the following biennium.

Lenczewski noted that last year’s tax increases were a result of a budget deficit, and “everyone did the best they could.” She noted that with a projected $825 million surplus — that will be updated Friday with the release of the February Economic Forecast — the state is in a good position to act on tax relief.