Tax bill surprises committee

Got a $1 billion deficit? Try scrubbing every corporate subsidy off the books.

House Taxes Committee Chairwoman Rep. Ann Lenczewski (DFL-Bloomington) sponsors HF4103, a bill that would do just that. The bill dedicates 23 pages to repealing corporate tax subsidies, ranging among the JOBZ program, foreign royalties, research credits and the bovine testing credit. The bill would also lower the corporate tax rate by at least one percentage point.

“It should certainly be controversial,” she said at the March 19 meeting. She came up with the idea after wondering how to solve the $938 million biennial deficit without cutting vital programs.

A House researcher identified every corporate state subsidy in the tax code, and this bill would eliminate most of them.

Almost immediately after walking through the bill, committee members raised concern. Some wondered how the governor would sign a bill that scraps JOBZ, a program he created and promotes. Others asked whether getting rid of tax breaks would hurt the state by driving businesses to cut jobs or move elsewhere.

Rep. Randy Demmer (R-Hayfield) said corporate tax breaks give companies an incentive to come to the state.

“Most of the things we’re undoing were made for the purpose of creating jobs,” he said.

After the meeting, Lenczewski said there were major hurdles to overcome, but she hoped to build the omnibus tax bill around it.

The bill was a surprise even to members of her own caucus, Lenczewski said. She didn’t show it to anyone ahead of time, because members would latch on to all kinds of things they didn’t want to let go.

However, the bill would lower the corporate tax rate and raise money so that lawmakers can avoid cuts to health and human services, which would make the bill more palatable to both sides of the political aisle, she said.

“There are a lot more winners than losers,” Lenczewski said.

The committee is expected to take up the bill again after the Easter break, and the public will be invited to testify. There is no Senate companion.