Local Representatives Vote Yes on Phase Out of Business Property Taxes

A tax bill that would phase out state property taxes for Minnesota business owners passed the House last week in the Minnesota House—and Eagan legislators Rep. Diane Anderson (R) and Rep. Doug Wardlow (R) were among those who voted in support of the measure.

The omnibus bill, which passed in the House on a 72-62 vote last Wednesday, would eliminate state business property taxes over a 12-year-span beginning in 2014. The bill also exempts some business property values from taxes in 2013 and freezes local government aid at 2012 levels.

Supporters of the tax bill say it will serve as a catalyst for business development in the state. Minnesota's business property taxes are higher than the national average, according to Finance and Commerce.

"[The tax bill] emphasizes investment in innovation and small business that will make Minnesota a magnet for research and development, entrepreneurial innovation, and the bio-tech and medical device industry," Anderson wrote in a newsletter to constituents. "We need tax reforms to improve our job climate. Helping people get back to work and keeping good businesses in our state is my top priority."

Wardlow called the bill "very important" and said it will help small businesses with less than 20 employees by allowing them to take a capital equipment exemption on taxes.

But critics of the bill say the phase out of business property taxes would hurt the state's general fund balance. The phase out and other credits included in the bill may negatively impact the General Fund by more than $69 million in fiscal year 2013, according to a press release issued by the Minnesota House of Representatives Public Information Services.

Democratic lawmakers also took aim at a provision in the bill which would reduce the renters' property tax credit—a burden they say would fall primarily on the elderly and poor.

“Asking renters on fixed incomes—87,000 of which are seniors or disabled renters—to pay a little more so that corporations can pay a little less is the ultimate example of misplaced priorities by the Majority," St. Joseph Rep. Larry Hosch (DFL) wrote in a news release.

A similar bill introduced on Feb. 20 in the Minnesota Senate passed out of committee last week and is awaiting a second reading.