More on the Governor’s tax reform commission! Remember the commission asked for public comments on how to improve Minnesota’s business competitiveness? The Minnesota Budget Project, Growth & Justice, and others have had the opportunity to testify before the commission. Now the Institute on Taxation and Economic Policy (ITEP), a national nonprofit tax research group, has sent its own comments to the commission. A couple of quotes from the ITEP public comments:
- State and local taxes are a very small part of the cost of doing business. If you add up all state and local taxes paid by businesses, they account for only 0.8 percent of business costs.
- Reducing minor state and local taxes through rate cuts or more tax credits isn’t likely to impact a
corporation’s decision to locate in a state. For example, long-time business leader and New York
City Major Michael Bloomberg told the New York Times that “any company that makes a decision
as to where they are going to be based on the tax rate is a company that won’t be around very long. If you’re down to that incremental margin you don’t have a business.”
Coincidently, Art Rolnick, Senior Vice President and Director of Research for the Federal Reserve Bank of Minneapolis, recently testified to the commission that tax incentives for particular businesses should be avoided: “Even though tax incentives look good from a parochial point of view, having an economic bidding war – playing cities and states off against each other – that’s counterproductive.”
Finally, check out ITEP’s blog called Talking Taxes, which is a great way to learn about what’s going on in other states when it comes to state and local tax proposals.