Submitted by the Minnesota Senate Republican Caucus

Senate Republicans recently blasted the late-evening passage of massive tax increases on working Minnesotans, job creators and property owners.

"Our state's economy is on life support. Our families

and business are struggling," said Sen. Julianne Ortman

(R-Chanhassen), the minority party's lead on tax issues. "Government tax increases will only make things worse

for them."

"Their balance sheets should take priority over the state's balance sheets," she added. "We can find other options."

For individuals and families, the DFL bill would raise taxes on every Minnesota taxpayer, expand sales tax to Internet purchases, repeal limits on local property tax increases and end some tax refunds and deductions. The planned tax increases put Minnesota in the top ten personal income taxes rates twice - including fourth highest in the nation for a new top tier and seventh for the increased second (currently top) tier.

"Under cover of night, on a Friday night as average Minnesotans are trying to turn their attention away from a long workweek - if they still have jobs - 35 Senators passed a bill that picks their pockets," said Senator Geoff Michel (R-Edina). "This is a poor way to lead."

"This nearly $2.2 billion job-killing, family budgetbusting tax increase was the centerpiece for a Democrat budget that couldn't set real priorities and does next to nothing to solve Minnesota's real problem: too much spending and too much reliance on working Minnesotans to continue paying the tab," added Republican leader David Senjem of Rochester. "What it does offer for so-called tax relief is too little and is a poor replacement for proven programs like JOBZ."

For small businesses, the proposed 9.25 percent rate is the highest in the Midwest, putting Minnesota businesses at a competitive disadvantage, as well as discouraging growth and reinvestment of capital that helps small businesses expand. The bill also cuts JOBZ, a state tax incentive program that creates jobs in some of Minnesota's most economically depressed areas. Other provisions raise franchise and income taxes on businesses and the statewide property tax on commercial/industrial property, but provides a $30 billion tax incentive for an unnamed windmill manufacturer, which Republicans unsuccessfully tried to remove.

The Senate tax increases exceed even the House's farreaching tax bill and will unlikely survive a joint Senate- House conference committee. And, the final legislative plan coming out of that panel will certainly be vetoed by Governor Pawlenty, so the Legislature will have limited time to recreate an alternate plan to replace it.

Submitted by the office of Senator Tom Bakk, Tax Chair

The 2009 Senate Tax Bill passed on April 2,4 restores tax fairness, helps solve the budget deficit and, most importantly, invests in jobs to set Minnesota up for a successful future, according to Minnesota Senate Tax Chair Sen. Tom Bakk, DFL-Cook. "Investing in jobs and economic development is the key to future success in Minnesota," Bakk said. "Provisions in this tax bill set the stage to accomplish that."

Those provisions include:

o Minnesota business investment company tax credit: This creates a tax credit for companies that invest in small businesses just starting up in Minnesota. The businesses must have no more than 100 employees, 80 percent of which must be in Minnesota. One hundred-fifty million dollars are invested in the program.

o "Angel Investor" investment tax credit: A 25 percent tax credit is offered for investments in a qualified hightechnology, biotechnology or medical device or green manufacturing business. A qualified business must have at least 80 percent of its employees and payroll in Minnesota, have less than 25 employees total, have gross receipts of less than $2 million a year and be in operation for less than 10 years. Forty million dollars are appropriated for this tax credit program.

o Historic structure rehabilitation tax credit: A tax credit for historic structure rehabilitation projects is offered to help construction projects begin and put the labor force back to work. Qualified properties must be either certified historic structures or structures in a certifi ed historic district. This credit provides $40 million in tax relief.

o Upfront sales tax exemption on capital equipment: The bill provides an upfront exemption on sales tax for capital equipment. Businesses currently must file a refund application to receive the exemption, which is costly and time-consuming for many small businesses. This provision provides $94 million of immediate tax relief for Minnesota businesses.

o Business income tax reductions: This provision will help mitigate some business and income tax liability. It allows S-corporations, partnerships and limited liability companies to pass through 10 percent of their net income for the next four years without tax liability. This adds up to $306 million in additional tax relief for businesses.

o Unemployment income exempt from taxes: The Senate's bill conforms to federal stimulus bill language that exempts up to $2,400 of unemployment income from state income taxation. This will help the thousands of Minnesotans looking for work right now.

o Minnesota Investment Fund uses: A $3 million loan from the state is approved for equipment used to establish an aircraft completion center at the Minneapolis-St. Paul International Airport. The center must fill a variety of requirements, including creating at least 200 new manufacturing jobs within 24 months of receiving the loan and no less than 500 new jobs over a five-year period in Minnesota.

o Windmill manufacturing plant incentives: The bill provides tax incentives to a green business exploring development. It is a windmill manufacturing plant that could create up to 800 new jobs and a new focus on green manufacturing in Minnesota.

The Minnesota Senate's plan also proposes a number of responsible spending reductions, such as eliminating new JOBZ sign-ups, reducing police and fire aid to local governments by more-manageable levels than the governor's plan, repealing the low-income gas tax credit and eliminating the mortgage interest deductions on second homes.