Part I: Plan for Job Creation
1. Provide tax relief to encourage job creation and business investment.
- Provide tax relief to employers by cutting the business tax. Tom Emmer calls for the current rate of the business (corporate franchise) tax of 9.8% to be reduced to 8.8% in 2011, 7.8% in 2012, further phased-in reductions to 3% by 2015, and eventual repeal. This proposal will save Minnesota employers in both greater Minnesota and the metro area an estimated $368 million in FY2012-13. Reducing this tax enjoyed bipartisan support in the last legislature, and is cited by state business leaders as a major impediment to business growth by C-corporations. This phased-in repeal will greatly improve Minnesota’s tax competitiveness among the other states.
- Provide tax relief to small business to get them hiring again. Tom Emmer will provide a 10% subtraction beginning in 2011 of active pass-through income for S-corporations, partnerships, and LLCs. This will give small business owners critical tax relief estimated at $75 million in FY2012 and $83 million in FY2013, and will give them a greater means to reinvest in their businesses and hire new employees. This is another proposal which enjoyed both Republican and DFL support last session. Tom Emmer wants to increase this subtraction to 20% in later years.
- Reduce the state general property tax. This tax is onerous to both small businesses and large corporations alike. Tom Emmer will prevent this tax levy from increasing by inflation adjustment and will reduce the levy amount by $100 million in FY2012-13, with further reductions in future biennia. Reducing this tax will provide balanced tax relief to a broad array of businesses, including those which are presently unprofitable.
- Increase Minnesota employers’ opportunities to grow knowledge and technology jobs by expanding the state Research and Development Tax Credit. Minnesota created the first state R&D credit almost thirty years ago. Today, however, its credit is among the lowest in the United States and puts the state’s companies at a competitive disadvantage. Tom Emmer will expand the R&D credit to regain Minnesota’s competitive footing with other high-tech intensive states.
- Accelerate the growth of start-up companies and subsequent jobs through expansion of the angel investor tax credit. Minnesota recently enacted legislation to provide a tax credit for investors in early-stage companies. However, Tom Emmer believes that this credit should be expanded to provide more help to early-stage enterprises, many of which are highly mobile technology companies, so they can attract venture capital investments and create new jobs and innovation here in Minnesota.
- Prevent delays in business reinvestment by making the capital equipment sales tax refund an upfront exemption. Minnesota business owners essentially loan the state their own money by having to pay and then request a refund for sales taxes paid on equipment used in manufacturing, mining, or refining. The refund mechanism delays businesses the ability to reinvest their money in their own businesses. Changing the refund to an outright exemption will free up hundreds of millions of dollars for new investment needed in these capital-intensive industries.
- Extend the capital equipment exemption to service companies subject to the sales tax. The extension of this exemption to so-called “1987 services” will permit small cleaning, maintenance, security, and other businesses additional capital to make new investments and hire new workers.
2. Reform state regulation.
Tom Emmer believes that the state’s regulatory powers and procedures must be exercised with common sense, consistency, and timeliness. Duplicative rules and onerous regulations create costs to businesses and prevent them from expanding and hiring. He will insist on a fundamental review of state agencies’ processes to ensure that unnecessary or counterproductive regulatory barriers are removed to ensure economic growth.
3. Reform the state’s education systems.
Tom Emmer will demand changes from Minnesota’s K-12 and higher ed systems to improve the quality of our children’s education and the competitiveness of our future workforce. The benefits to Minnesota’s economy from these reforms will not be immediate, but they will be profoundly important to sustain the state’s long-term global competitiveness.
4. Reform state government to improve efficiency and lower the cost of the public sector.
The projected budget deficit for the next biennium must be solved without raising taxes on struggling Minnesotans and their employers. But demographic changes will continue to put unsustainable demands on the state budget for many years to come without fundamental changes. Tom Emmer knows that there is waste and inefficiency in the bureaucracies and programs of state and local government. He will demand broad reform inside state government, and lead the effort to reprioritize state spending.