Tax cut plan criticized

Some members of a House division questioned the wisdom of Gov. Tim Pawlenty’s proposal to cut corporate taxes during a Feb. 3 hearing on the Department of Employment and Economic Development’s proposed 2010-2011 biennial budget.

Rep. Ryan Winkler (DFL-Golden Valley) was among several members of the House Bioscience and Workforce Development Policy and Oversight Division who criticized the governor’s plan to cut the corporate franchise rate in half over the next six years.

Winkler said that while the tax cut is intended to stimulate economic growth, there is no guarantee that it will; meanwhile, he noted, the governor also plans a 10 percent General Fund reduction for DEED programs that have already proven to be an economic boon to the state.

“I still don’t have an understanding of where the economic analysis comes from that we should be putting hundreds of millions of dollars for cutting this corporate tax,” Winkler said. “We could be using that money for lots of other good things that you’re doing.”

Rep. Larry Haws (DFL-St. Cloud) said that if the corporate tax cuts are intended to stimulate the economy, then measurable economic goals should be included in the governor’s plan.

“We’re getting rid of some things that are working, and I’m not too sure that the other is going to work,” he said.

Republican division members defended the governor’s plan.

“I’ve spent a number of years visiting manufacturers and employers in our area of the state and asking them specifically, ‘What are your challenges?’ And in almost every single instance tax and regulatory climate come up,” said Rep. Steve Gottwalt (R-St. Cloud).

Rep. Joyce Peppin (R-Rogers) said Minnesota is well-known to have the “third-highest” business tax rate in the industrialized world. She also challenged DFLers to come up with a budget plan of their own, rather than just criticizing the governor’s proposals.

DEED Commissioner Dan McElroy said that Minnesota’s business climate is multi-faceted and that taxes are not the only issue to consider; however, he predicted that the governor’s plan would make Minnesota more competitive with neighboring states over the long term.