The Honorable Roger Chamberlain
Chair, Committee on Taxes
Room 15, Capitol
St. Paul, MN 55155
Dear Chair Chamberlain,
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to express our support for SF 1449. This pro-growth legislation would reduce both Minnesota’s corporate income tax rate as well as the Alternative Minimum Tax (AMT), thereby making Minnesota a more competitive place to start or expand a business. Cutting taxes on job creators is perhaps the single most important action lawmakers can take to accelerate economic growth. We urge you to stand with businesses by supporting SF 1449 and working towards its swift passage.
Levied at a flat 9.8 percent, Minnesota’s corporate income tax rate is the fourth highest in the United States. Due to such a high tax rate and a complex tax code, the non-partisan Tax Foundation ranks Minnesota the 7th worst place for business, according to their State Business Tax Climate Index. Worse yet, Minnesota charges a rate significantly higher than all of its neighbors, save Iowa. These ranks are not a recipe for success and are partly responsible for years of sluggish economic growth.
Immediately dropping the state corporate income tax rate to 8.8 percent as written in SF 1449 would make Minnesota more economically competitive. Since the corporate tax rate is a significant factor in how businesses deploy capital, hire workers, and determine wages, it is essential for states to have a rate as low as possible. Evidence continues to mount that high business income taxes are damaging for economic growth. By slashing Minnesota’s uncompetitive rate by 10 percent, Minnesota-based businesses will be able to more effectively foster economic growth across the state.
SF 1449 rightly cuts the AMT to 5.2 percent, down from 5.8 percent. The purpose of the AMT is to limit tax breaks for businesses and individual taxpayers to ensure those who use many credits and deductions pay some tax. This is an incredibly inefficient system as it requires certain taxpayers to essentially figure out their taxes twice; once under traditional income tax rules and again under AMT rules. Usually taxpayers must complete additional forms to determine whether the AMT will apply to them. While SF 1449 wouldn’t reduce the complexity of the AMT for filers, it will reduce the liability these taxpayers will pay.
This legislative proposal is better than the status quo and will certainly be welcomed news to taxpayers and job creators across Minnesota. We continue to urge lawmakers to devote their energy towards reducing taxes on all Minnesota families, small businesses, and corporations. We pleased to support this legislation and look forward to working with you to enact this pro-growth legislation.
Sincerely,
Thomas Aiello
Policy and Government Affairs Associate