Responding to the Senate Republican’s call to cut corporate taxes in Minnesota, Senate DFL Caucus Leader Tom Bakk said today Republicans are sending the wrong message on job creation.
“Our number one priority this session is creating jobs and positioning Minnesota for long-term prosperity,” said Sen. Bakk, DFL-Cook, who spent the past four years chairing the Senate Tax Committee. “We are absolutely committed to working with Gov. Dayton and legislative Republicans on getting Minnesotans back to work.”
“However, I believe that cutting corporate taxes is a poor tool to spur economic growth. Not only is it extremely costly to our state, it provides absolutely no guarantee it will create jobs or help Minnesota’s small businesses and entrepreneurs,” said Sen. Bakk. “All this bill does is shift a greater share of the state’s tax burden onto working families.”
Sen. Bakk noted the following facts:
• Corporate profits are not the problem with this economy: NY Times article (November 23, 2010): “Corporate profits have been doing extremely well for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.”
• Slashing corporate taxes doesn’t help small businesses: While small businesses are responsible for 65% of the new jobs created over the past 17 years , very few will benefit from lower corporate taxes. According to the most recent data from the Department of Revenue, 96% of small businesses were not subject to Minnesota’s corporate income tax.
• Nearly half of corporate taxes in Minnesota are paid by out-of-state corporations: According to a 2007 report from the Department of Revenue, 46.5% of corporate taxes are paid by corporations headquartered outside of Minnesota.
• Minnesota already has a competitive tax climate for businesses: Despite Republican rhetoric, Minnesota does not have the 3rd highest corporate tax rate in the nation. Once all credits and subtractions are accurately accounted for, Minnesota’s effective tax rate on corporations is 3.1%, 15th lowest in the country . In fact, according to a 2006 Economy.com report, the cost of doing business in Minnesota ranks 22nd nationwide.
“The facts are clear: cutting corporate taxes doesn’t help small businesses, doesn’t provide immediate job growth, and only serves to pad the bottom line of the corporations that are already experiencing record profits,” said Sen. Bakk. “Compare this with what legislative Democrats passed last year: a true jobs bill that has already generated more than $25 million in private investment in Minnesota small businesses and start-ups.”
“We need to keep asking the question: how can we position Minnesota for long-term growth,” said Sen. Bakk. “Let’s put the focus on improving our schools, preparing our workforce for the 21st Century, and using smart, cost-effective strategies to help small businesses grow jobs and invest in Minnesota. Simply handing $200 million in tax cuts to large, often out-of-state, corporations will not help us meet these goals.”