Compromise emerges on Minnesota tax relief
On Tuesday, March 2, the Senate Tax Committee gave the green light to an amendment to a compliance bill that would allow tax filers who were receiving additional weekly unemployment benefits of $ 600 to subtract a portion of that amount from their taxable income. The addition has been a priority for Democratic lawmakers on Capitol Hill and could be a step forward in securing a compromise plan across the divided legislature.
More than 100,000 businesses received PPP loan funds last year and have used the aid to help keep their employees on payroll despite the business downturn spurred by COVID-19 and state efforts to curb it.
“We are in an unusual time, we need to move this bill forward,” said Senate Tax Committee chairperson Carla Nelson, R-Rochester, who supports adding an amendment exempting some of the tax allowances. additional unemployment. “We have 67 senators who I believe are focused on the laser to try to help their constituents recover.”
Panel members said they are also considering pooling additional funds for summer school programming with the bill they hope to pass earlier this month. Gov. Tim Walz and Democratic leaders said the funding was crucial in making up for lost learning time as students turned to distance learning models.
The bill now goes through the full Senate, but Nelson and the bill’s mover, Sen. Tom Bakk, I-Cook, have indicated more changes may be underway as the majority leader in the Senate, Paul Gazelka, R-East Gull Lake and Speaker of the House Melissa Hortman, D-Brooklyn Park, seek to negotiate a bill that could pass it through the Republican-led Senate and the US-controlled House of Representatives DFL.
“I hope that Chief Gazelka and President Hortman can find an additional provision in this bill that will make it truly bipartisan,” Bakk said. “I would really like this bill to be tabled in the governor’s desk before March 15 and, unfortunately, this committee cannot do it on its own.”
Some business owners face a March 15 filing deadline without state intervention to match state tax codes with federal codes. And lawmakers have been pressured to change policies in time to avoid any problems.
House Taxation Committee Chairman Paul Marquart D-Dilworth introduced a compliance bill in January reflecting Bakk’s original bill and said on Tuesday he hoped the move would result in a deal.
Marquart said he recommended legislative leaders find ways to put in place targeted supports for the hardest hit businesses, including those that took out the loans and reported net operating losses last year. . And he urged them to include relief for Minnesotans who were receiving unemployment benefits.
“We need to take action on PPP compliance but I also want to make sure that we are helping all businesses and the unemployed,” Marquart said. “I don’t want to leave any of these businesses suffering. “
Under the amended Senate bill, individuals could subtract up to $ 1,500 of additional unemployment income from their taxable income. And joint depositors could have up to $ 3,000 exempt. The removed taxes could cost the state between $ 30 million and $ 50 million, according to an analysis.
Wider tax compliance for businesses that have received PPP loans comes at a price of around $ 440 million in the next budget cycle. Last week, the announcement of a projected $ 1.6 billion budget surplus helped reignite conversations about how to spend one-time funds.