Confronted by a tough economy, Minnesota Governor Tim Pawlenty (R) has an interesting idea – tax relief business.
As reported on TwinCities.com on January 16, Pawlenty called for a variety of business tax cuts in his State of the State address.
The key measures were reducing the corporate income tax rate from 9.8 percent – which is third highest among the 50 states – to 4.8 percent and allowing businesses to expense the cost of capital expenditures in the year the assets were purchased.
These would go a long way in boosting business and investment in Minnesota – though his proposed six-year phase-in on the corporate tax cut is way too long, and will only serve to delay the economic benefits.
Other seemingly more targeted measures included $50 million in small business tax credits; a 25 percent refundable tax credit for small-business owners that reinvest in their firms quickly; and a capital gains exemption for qualifying investments in small businesses.
On the “Small Business Survival Index 2008,” which ranks the states according to their public policy climates for entrepreneurship, Minnesota came in at a dismal 46th. These Pawlenty tax cuts would clearly improve the frigid policy climate for business in Minnesota.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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