The Free Press, Mankato, MN

July 11, 2013

DFL doesn't understand business, taxes


---- — When reading the DFL response by Rep. Kathy Brynaert and Rep. Clark Johnson to a letter written by Al DeKruif you can see why the DFL just doesn’t get it. They give themselves a pat on the back for an alleged pro-business success when it is more of the same — the government is here to help, with tax and spend nonsense that will not grow small business.

The House and Senate DFL enacted a huge, $2.1 billion tax increase and if you count fees, a $2.9 billion total increase. No one has explained why this increase was necessary when we were only faced with a $627 million short-term deficit (that was shrinking based on projections).

The bill created a new 9.85 percent top income tax rate for joint filers with taxable incomes of $250,000 or greater and single filers with taxable income of $150,000 or greater. As a business owner myself, I can tell you that an increase in taxes and regulations on small businesses directly impacts raises for current employees, and hiring additional employees for expansion.

The DFL also enacted new business-to-business sales taxes on services over the strong objections of the business community. Under the new law, equipment repair of all varieties, including farm equipment, computer/IT repairs, telecommunication repairs and warehousing and storage fees will all be taxed at our current 6.875 percent.

Many businesses will be negatively affected by these provisions and there are also unknown effects from this unneeded extension of the sales tax. It’s insane to believe that this business-to-business tax collection won’t impact the business and ultimately the consumer! The DFL will now force online sales tax collection for the first time as well causing major hassle and expenses to handle for small businesses.

Contrary to the rhetoric, the Internet sales tax puts small businesses in Minnesota at a disadvantage, driving your neighbors small home business out of Minnesota (or out of compliance with Minnesota law, making them criminals). They can’t compete when folks can buy from businesses in states that don’t charge the tax.

The letter writers continue with more talk about government picking winners and losers and who gets help and who doesn’t. I’m not sure I want to live in a state where the government decides who the winners and losers should be? Small business owners and entrepreneurs want predictability, certainty and cost effective reasons to create, grow and expand in Minnesota. Minnesota did just the opposite in 2013.

The DFL claim they are business friendly but they forget about simple basic economics. A dollar in tax revenue is a dollar less that consumers can spend on goods and services and/or that business owners can invest in hiring employees to make and sell those products. It doesn’t matter if the tax is imposed on cigarettes or property, Internet purchases or income. What matters is the total tax burden. Keeping the total burden low is the first principle of a good business climate.

Overall, the negatives far outweigh any positives the DFL can spin from the 2013 legislative session, and the major tax increases are a big setback for Minnesota. It revives the stigma of Minnesota being a very high-tax, unappealing place for someone to expand or grow a business and for investors to invest in.

You don’t see the chamber and NFIB who actually represent businesses in Minnesota claiming the 2013 session was a success. Rep. Brynaert and Johnson as well as the rest of the DFL are out touch with businesses and taxpayers in Minnesota.

John Hollerich is a CPA and owner of Protein Sources LLP in Mapleton, which is an agribusiness consulting firm.