Tax priority discussion continues

In two meetings, the House Taxes Committee has gotten through only two provisions in the governor’s proposed budget because of lengthy discussions.

During the committee’s Feb. 10 meeting, Revenue Commissioner Ward Einess explained the reinvestment tax credit that would encourage job growth and new investments in Minnesota businesses. The credit would be capped at $50 million and there would be a one-time General Fund revenue reduction in fiscal year 2010.

“Tax cuts are spending,” said Rep. Ann Lenczewski (DFL-Bloomington), committee chairwoman. “So we either need to raise revenue or cut something else. It’s about choices. I don’t know that this is the right package.”

The governor’s plan would provide incentives for businesses that invest in their businesses quickly, Einess said. Qualifying investments would include things like machinery, equipment and furniture.

Rep. Randy Demmer (R-Hayfield) said, “We need to keep in mind about whether we’re investing, or think we’re investing, or whether it’s an expense for something that’s a service that we think people need to have.” He added that a grant could create jobs, where a credit might only save jobs.

Rep. Tom Rukavina (DFL-Virginia) asked, “Where is there proof that cutting business tax leads to job creation?”

To which Rep. Kurt Zellers (R-Maple Grove) asked, “Where can you show that raising taxes actually produces jobs?” He used Broadway in New York City as an example of how increased taxes have hurt the theater district there.

“Tax increases aren’t good for business,” Lenczewski said. “I’ve done many of the things people on both sides have wanted for business.”

Most people say they want a balanced approach, she said.

“It’s so important to have the debate,” Lenczewski said. “This is hard. We need bills that get signed in the end that balance the budget. We need to think it through a little bit.”