(The Center Square) – After Minnesota a Budget surplus of $ 1.6 billion For the next two years, Republicans said in a press conference Monday the state taxation The Paycheck Protection Program (PPP) loans are “non-liquidable”.
More than 30 states, including all of Minnesota’s neighbors, have met the Internal Revenue Service tax code and will not tax these loans.
Legislators argued that companies did not plan these taxes and already struggled last year under Governor Tim Walz to close some companies for months and limit others to 25% capacity.
If nothing changes, the state will tax companies that borrowed PPP as income at a corporate tax rate of 9.8%, leaving a company that received $ 500,000 in PPP loans a tax burden of around $ 50,000 USD can get.
The U.S. Congress approved the PPP program as part of the March 2020 stimulus bill to curb the rising unemployment rate last spring. The program awarded $ 11.3 billion to 102,352 Minnesota companies in 2020.
Senate Majority Leader Paul Gazelka, R-East Gull Lake, said he was negotiating the possible tax break with DFL House spokeswoman Melissa Hortman from Brooklyn Park, who said he was “a little openness” to the idea in exchange for other policy measures have.
Senator Thomas Bakk, I-Cook, said the $ 438 million corporate taxes would otherwise be invested in the community, loans that the federal government specifically said should not be taxed.
Bakk sponsored Senate Act 263 to ensure that PPP loans are not taxed and deductible from business expenses.
“They made business decisions to keep the workers … because they got the loans on the business model that they don’t have to pay taxes on the money,” Bakk said. “Well, to come back and say after you’ve spent the money keeping people busy, what the whole point of the program was, to know they had to pay taxes on it, seems really, really unfair.”
Bakk said the one-time federal rebound, which fueled the state budget surplus, should be spent on one-off expenses such as government tax forgiveness on PPP loans.
Beth Kadoun, vice president of tax and tax policy for the Minnesota Chamber of Commerce, said lawmakers should do a do-no-harm to the 100,000+ companies in the state that took out loans they believed would not be taxed – Take the approach.
“The message from our private employers is clear: Minnesota’s economic recovery must be a top priority for this meeting,” said Kadoun. “This includes a do-no-harm approach, which is vital so that our private sector employers, who are doing their best to keep their doors open, and employees do not have to pay extra while we are continue to grapple with the effects of COVID -19. “
PPP loan forgiveness is another piece of the budget puzzle.
While the DFL legislature wants higher corporate taxation, nicotine and higher incomes to fund schools and other tax breaks, the GOP says tax increases are a poison pill. However, Walz’s proposed $ 52.4 billion budget depends on it $ 1.66 billion of tax increases.
Gazelka said he plans to bring PPP forgiveness legislation to the Senate within a week.