The Commission members will soon be developing their recommendations on “how Minnesota can improve and modernize the state’s tax code for businesses to encourage economic growth in a fast-changing, highly competitive and global economy.” This report will be released on December 1.
If we think about the state’s revenue system as a puzzle, the Commission to date has been taking one piece of that puzzle – business taxes – and examining it closely. We urged the Commission to now put that piece back into place and understand its role in a larger context.
I made the case that the public sector is a partner with individual Minnesotans, the for-profit sector and the nonprofit sector in creating a society with a high quality of life in which all people have the opportunity to succeed. The business community and our economy benefits from public investments that include:
- our physical infrastructure
- the human capital of our residents
- protecting the safety and well-being of both people and property, and enforcing our laws
- the way we care for each other and ensure that all people can live in dignity, and
- cultural and environmental amenities.
All these make Minnesota a great place to live, raise a family and do business.
However, recent tax and budget trends threaten our economic future. I urged the Commission to ensure that their final recommendations have two characteristics:
- That it at least be revenue-neutral; that is, it does not cut total tax revenues. Reducing revenues simply does not make sense when the state is facing a deficit of $2 billion in the next budget cycle, including the impact of inflation.
- It should pay attention to tax fairness, and not make the tax system more regressive. The state’s tax system has already become more regressive since 2002, and the Commission’s recommendations should not make that worse.
A set of recommendations that have these characteristics will better fit into our current fiscal environment.
– Nan Madden