Duane Quam, a Republican, represents District 25A in the Minnesota House of Representatives. On July 1, a flurry of tax increases and changes to Minnesota laws went into effect. As many of you know, a small-business tax rate of 9.85 percent now applies to S Corps and joint-income filers earning more than $250,000 per year — a 25 percent increase. This likely will force downsizing, relocating or price increases, at a time when our state's economy can't afford such things.
Family-owned farms and businesses will pay more thanks to the estate tax (gift tax) increase. This tax punishes families for passing down holdings they've already paid a tax on and is expected to cost Minnesotans nearly $50 million. Many counties in our area will see an increase in the vehicle "wheelage" tax, which is paid when you renew your auto registration. The massive Omnibus Tax Bill this spring removed a provision that required counties to get approval from voters before they can install this new $10 tax; many county boards are on their way to quietly passing it.
A controversial warehousing sales tax will affect rural businesses with already narrow profit margins and make Minnesota the only state to use such a tax. The law was passed in the final hours of the 2013 session and never saw a public hearing or meeting in the House. It will take effect next spring, but businesses that hire warehousing services are making plans for next year right now and have had to rethink their business plans.
I joined others in calling on Gov. Mark Dayton to convene a special session of the Legislature to fix this poorly thought out idea, and I hope he will consider it.
These taxes have proven unnecessary, given the budget progress of the last two years. Since I joined my Republican colleagues in passing an efficient and pro-growth budget in 2011, the results have been impressive.
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Officials announced last week that between February 2013 and the end of the fiscal year (June 30), Minnesota brought in $463 million more than anticipated in revenue from new business growth and job creation. All of this surplus will be used to pay off school borrowing which occurred under DFL control in 2009. You may recall that this spring, despite earlier promises, the DFL majority did not pay down the school debt and actually added $50 million to the debt by delaying its repayment.
Besides the tax increases that began on July 1, a new solar energy mandate is now in place, which could raise electric bills for homeowners, families, farmers and businesses. The law requires large utilities to use solar panels on their power grid by 2020 and to pass along the higher costs to ratepayers. I firmly believe we need to have a comprehensive energy policy in Minnesota; however, solar is not yet efficient enough to be used on a massive scale through government mandate.
In our schools, the traditional GRAD standard tests that were supposed to ensure that students have basic reading, writing and math skills will be discontinued in favor of different tests that don't require a minimum score. I was sad to see these measurements go by the wayside, because some school districts simply aren't keeping up. A high school diploma ought to be more than just a certificate of participation.
As the budget picture has improved dramatically from the gloomy outlook in 2010, we must not forget the fiscal restraint and tax policies that turned our economy around. The new taxes imposed by the DFL make Minnesota an island in the Midwest and provide incentives for job creators to leave our state.
Instead, we ought to encourage entrepreneurship and innovation to grow jobs and bring in real tax revenue that isn't taken by the hands of St. Paul bureaucrats. Our schools and communities deserve better.
If you have any questions about complying with the dozens of new tax code changes, I encourage you to visit the Dept. of Revenue's website at www.revenue.state.mn.us.
