MN Senators seek to redirect ‘loophole’cash to small firms

02/14/2006

by Conrad Defiebre
Star Tribune

A DFL push to close so-called tax loopholes used by corporations with foreign ties got a new twist Monday when two senators urged directing most of the added revenue to small businesses as a property tax cut.

DFL Sens. Steve Murphy of Red Wing and Dallas Sams of Staples said a 35 percent reduction in commercial-industrial property taxes on the first $150,000 of the value of business facilities would amount to more than $77 million statewide over a two-year period.

That, they said, would put tax relief where it would do the most to boost jobs—with small businesses, often touted as the main engines of economic growth. Their plan would cut property taxes 35 percent on a $150,000 business facility, and 4 percent on a $1 million facility.

For years, DFL proposals to help erase state budget deficits with new tax rules for foreign operating corporations (FOCs) have foundered on objections that they would kill jobs. With budget projections now showing a surplus, the Murphy-Sams plan would return most of about $80 million in added corporate tax collections every two years to the business sector.

“It’s a smart investment and a big benefit, especially in greater Minnesota,” Murphy said. “We could close the FOC debate once and for all.”