ST. PAUL – By a vote of 68-66, the Minnesota House has approved taxes legislation that raises taxes by more than $1 billion and fails to fully protect all businesses from Paycheck Protection Program (PPP) tax hikes on forgiven loans.
State Representative Greg Davids (R-Preston), who is the Republican Lead on the Minnesota House Taxes Committee, noted the proposal was opposed on a bipartisan basis, with all Republicans voting no.
“With a $1.6 billion surplus and billions of dollars more coming from the federal government, we are in a position to help all Minnesotans who have struggled during this pandemic,” Davids said. “Instead, House Democrats are senselessly raising taxes and refusing to eliminate state taxation on forgiven PPP loans, moves that will continue to hurt our state’s job creators.”
Davids said the legislation would create a new income tax tier and give Minnesota the 2nd highest income tax rate in the country and directly impact many businesses who have been hit hard during the pandemic.
Under this legislation, Davids said those same business owners would also suffer from a cap placed on accepted Paycheck Protection Program (PPP) loans. These were loans many local employers used last year to help pay for employee wages or rent. Congress made these loans free from federal taxation, but not all Minnesota business owners would see the same forgiveness under the House Democrat bill.
“It no longer matters if the state has a surplus or deficit, or if our citizens are thriving or struggling, House Democrats truly believe there is never a wrong time to raise taxes,” Davids said. “We could pass PPP loan forgiveness for all business owners as a stand-alone bill with overwhelming bipartisan support. But House Democrats would rather use the provision as an end of session bargaining chip, putting all employers who accepted these loans in an unwanted financial position.”
In the coming weeks, Davids said the Minnesota House and Senate will work out a compromise taxes proposal that can be approved in both bodies. Davids noted that Senate leadership has stated it will not support tax increases this session.