The Free Press, Mankato, MN

June 19, 2013

Democrats used bait and switch on business

By Al DeKruif

— Some run for political office who, when running, say they are “business friendly” but in reality are not.

Businesses need elected officials to fight against tax increases, overbearing government regulations, the Minnesota Pollution Control Agency and other government agencies that not only add significant dollars to the cost of doing business but result in a competitive disadvantage.

The 2012 Citi[1] report notes that the “start-up” rate for small businesses has declined from about 12 percent in 1980 to only 8 percent in 2012. This is extremely troubling considering that small businesses account for approximately 60 percent of all new jobs created.

Regulatory compliance costs per worker is much higher for small firms than for larger firms, according to the Small Business Administration[2], and affirmed by millions of small businesses all over the nation. Dealing with government is a regressive tax, favoring largeness and discouraging small business creation and growth critical to Minnesota’s future economic success.

The Democrats illustrated this earlier this year by doling out taxpayer money directly to a few select large corporations such as 3M and the Mayo Clinic, among others while expecting small businesses (many with fewer than 20 employees) to pay for these subsidies through higher taxes, more tax complexity and additional regulations.

We need legislators who understand the significant impact of government regulations on farms and businesses. We all agree that clean air and water are important, but what happened in the 2012 election when folks voted for so-called business friendly Democrats is a whole other story.

In the House of Representatives, Rep. Jean Wagenius, DFL- Minneapolis, became chair of the Environment, Natural Resources and Agriculture Finance Committee (another “great” Democrat idea by the way : combining Agriculture with the “Environment” committee).

Rep. Wagenius is far from business and agriculture friendly being an extreme, environmentalist from the metro area; thus, the bait and switch. One votes for a legislator who seems business friendly based upon their campaign literature but one gets a chair of a major committee in St. Paul who knows nothing about agriculture, has never lived on a farm, and is not remotely business friendly.

One in five jobs in Minnesota is related to the agriculture industry [3]. The best interests of rural Minnesota and agriculture are not met by a chair who has no knowledge in those areas.

When folks voted for a Legislature that said, “We need to tax the rich,” what they actually got was a Democrat majority in both the House and the Senate (along with the governor) that had such an insatiable appetite for spending that they decided to tax everybody, a $2.2 Billion tax increase — not just on the rich.

Yes, this Democrat Legislature did tax the rich, making Minnesota the fourth highest taxed state in the nation behind Hawaii, California, and Oregon[4] by adding a new fourth tier tax, increasing the marginal tax rate by approximately 25 percent. Minnesota also has the seventh highest sales tax rate [5], as well as one of the highest corporate tax rates in the nation [6].

Many of these so-called rich are your neighbors who own an S-Corporation or LLC-structured business and pay their business taxes through their personal income tax returns. Every dollar paid in taxes means less to invest in more employees, machinery and equipment and long-term economic growth. I actually know some folks that are considering leaving Minnesota due to this increase.

The Democrat controlled Legislature and governor added new taxes for: warehousing and storage services, telecommunications equipment, electronic and commercial equipment repair including farm equipment, satellite service, gifts, digital product Internet sales and a 48.4 percent motor vehicle rental tax increase [7]. All these taxes will negatively impact Minnesota families and small businesses including farmers.

Additionally, cigarette tax increases of $1.60 per pack, higher taxes on cigars and other tobacco products are clearly regressive taxes levied against the poor. Remember, the Democrats raised this tax and spent the money before it is even collected. When cigarette taxes are increased, many will purchase cigarettes from a neighboring state or less likely, stop smoking. If either of these things occurs, we will again be deficit spending.

Folks have to decide what kind of a state they want to live in. Minnesotans will have a chance to respond in 2014. Do you want to live in a high tax and spend state that drives business and the rich from our state or do you appreciate a Republican philosophy of limited government and growth and opportunity for all?

No tax increases were necessary to balance this year’s budget. Just a little work and prioritization of spending to make government more efficient would have balanced this budget and surpluses put in place would have been our future. Ronald Reagan said, “No man can be free unless government is limited.”

You decide.

Al DeKruif is a former District 25 state senator. He is the owner of DeKruif Enterprises and Sakatah Trail Resort. He lives in Madison Lake.

[1] https://ir.citi.com/TWBRHF%2FCyAsd1cGVByf7XMna2JEgIEZexW7a%2BGU67Eeuk8N44hmdEA%3D%3D

[2]http://www.sba.gov/sites/default/files/The%20Impact%20of%20Regulatory%20Costs%20on%20Small%20Firms%20(Full).pdf

[3] http://njhsocial.pbworks.com/f/agprofile.pdf

[4] http://taxfoundation.org/blog/monday-map-top-state-income-tax-rates-2013

[5] http://www.salestaxinstitute.com/resources/rates

[6] http://www.taxpolicycenter.org/taxfacts/Content/PDF/state_corporate_income.pdf

[7] http://www.house.leg.state.mn.us/fiscal/files/tax13.pdf