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Cali Owings, Published May 30 2013

At business panel, legislators defend tax hike

MOORHEAD – Defending a state income tax increase passed this spring by the Democratic majorities in the Minnesota Legislature, three local lawmakers told business leaders here Thursday that investments in other areas will keep Minnesota companies competitive.

In a panel hosted by the Fargo Moorhead West Fargo Chamber of Commerce, Sen. Kent Eken, DFL-Twin Valley, Rep. Ben Lien, DFL-Moorhead, and Rep. Paul Marquart, DFL-Dilworth, largely focused on the business impact of the recently completed legislative session.

The first question pointed out North Dakota’s lower state income tax rate, asking why all three lawmakers had voted for a tax hike on the top 2 percent of earners. Minnesota’s now taxes 9.85 percent of income in the top bracket, fourth highest in the U.S.

North Dakota lawmakers, on the other hand, provided $200 million in individual income tax relief during the state’s legislative session.

The legislators said revenue generated from increased taxes will be used to invest in the state and its business community.

State spending increases toward K-12 education – $485 million in the next two years – aim to create the “world’s best workforce,” which Marquart said would be beneficial to the state’s businesses.

In addition to adding all-day kindergarten and increasing early learning scholarships, lawmakers eliminated statewide graduation exams and will instead use earlier assessments to get students on the right track for colleges and careers.

The state needs to focus on “teaching for college preparedness and workforce readiness,” Lien said.

All three lawmakers expressed disappointment in the number of business-to-business sales tax provisions that were passed this year for telecommunications, warehousing and electronic repair services.

The disparity between the tax climates is touted by the Greater North Dakota Chamber of Commerce in a billboard campaign that angered some city officials in Moorhead. Earlier this month, the group put up a billboard in Moorhead that reads “North Dakota Open For Business.”

The statewide Chamber of Commerce announced on Thursday that it was expanding the campaign, adding a second billboard along Interstate 94 near Fergus Falls.

During the panel, the moderator, former Rep. Morrie Lanning, R-Moorhead, asked how businesses in Moorhead could compete with border cities in North Dakota with lower tax rates.

Marquart’s response? It’s not a competition.

“When one [state] does well, the other does well,” he said.

The DFL legislators also pointed out ways they advocated for the Moorhead area and Greater Minnesota.

For instance, $80 million increases in Local Government Aid and property tax aid and credits will help spread the tax burden across the state, Eken said.

Though a bonding bill almost wasn’t a reality this session, the Legislature included $20 million in flood mitigation funds that give priority funding for Moorhead.

Eken also authored a provision signed into law that gives $2 million in tax credits per year to businesses in Greater Minnesota that hire interns.

Readers can reach Forum reporter Cali Owings at (701) 451-5710