Tim Walz’s tax hike sparks fight with Minnesota businesses | Real Time Headlines

six years ago Tim Waltz Appointed Vice President Kamala Harris‘ Running mate, he’s busy running for governor of Minnesota. Shortly before Election Day, Walz and dozens of business leaders crowded into a luxury hotel on the shores of Gull Lake.

Eric Gibson, then president of Ultra Machining Company, recalled asking Walz if the Democrat thought high corporate and state taxes would hurt workers.

“We’re not taxing people,” Walz responded, according to Gibson. “We’re taxing businesses.”

For Geoff Baker, “It was a little bit of an ‘oh shit’ moment,” he recalled to CNBC, corroborating Gibson’s account. “That’s not what I wanted to hear,” said Baker, president of McFarland Trucking.

minnesota The current corporate income tax rate is 9.8%. Independent tax foundation Says this is the highest corporate tax rate of any state in the country.

Walz’s stance on corporate and other business-related taxes has not changed significantly since the Gull Lake meeting. Especially since the Democratic Party won three consecutive victories most In 2022, control of the state House of Representatives, Senate and governor’s office.

“Things have been tense,” Douglas Loon, president and CEO of the Minnesota Chamber of Commerce, which has more than 6,000 members, including Fortune 500 companies, said in describing the trade association’s relationship with Walz. Target, UnitedHealth Group and best buy.

CNBC spoke with nearly a half-dozen people familiar with the fight and reviewed letters to the governor and state lobbying disclosure reports.

They reveal that Walz’s policy battles have a common theme: Walz supports higher taxes on the wealthy or corporations, while corporate leaders fight back.

One of the battles has ended 1% surtax This applies to passive investment income in excess of $1 million. Waltz sign Legislation to tax global intangible low-tax income(valid).

Another new tax on the wealthy Walz signs law Limits standard and itemized tax deductions to households with gross income in excess of $220,000.

While Walz has often been willing to meet with business interests and hear their arguments, the governor and his Democratic colleagues have rarely backed down.

After meeting with Walz, business groups and executives were left with the impression that the two-term governor was not always interested in compromise.

As Harris prepares to release her first economic policy plan later this week, investors and business owners will be watching closely to see whether Walz’s approach to the tax law is reflected in the priorities of a potential Harris administration.

That bill, waltz sign The bill, which will become law in 2023 and take effect in 2026, would require a payroll tax of 0.7% on employee wages, with the tax split between employers and employees, according to the tax office. Tax Policy Center.

At the time, state regulators said the payroll tax could eventually rise to 0.88%, a figure often cited by tax opponents. But supporters believe the new payroll tax could bring in more than $300 million to fund a paid family leave program. Minnesota Reformers.

Intense lobbying for the bill included meetings with the governor himself.

Baker said at least eight representatives from the Minnesota Chamber of Commerce, including Luhn, met with the governor at the Capitol in St. Paul, Minnesota, last year to oppose the bill before he signed it. members.

“We’re very concerned about workplace benefits provisions,” including the payroll tax impact businesses could face, Baker said. Baker explained that they are also trying to encourage Walz to push for more tax reform laws to move the state off the top of the corporate income tax bracket.

While Walz did listen to them, the governor ultimately signed the bill, and the state remains the top taxer on corporate income.

One example he recalls is a recent bill that would establish a minimum wage in Minnesota. The bill has passed the state Legislature, but ride-hailing giants Uber and Lyft threatened thus reducing their presence in the state.

Walz vetoed the legislation in 2023. Increase Rideshare driver salaries.

George said he thinks Minnesota is a great place to do business, but acknowledged some of the taxes are high.

“People don’t always like the tax environment. But as long as taxes help people, I’m for it,” he said.

George also acknowledged that once Walz and Democrats win control of the Legislature in the 2022 elections, they will move faster to increase some taxes on the wealthy.

“They want to do something for the people,” he said.

Harris points to Minnesota rankings sixth Ranked high in CNBC’s America’s Best Places to Do Business study.

They also highlighted several private sector investments in Minnesota, such as $5 billion expansion Ongoing at the Mayo Clinic in Rochester, Minnesota.

The Harris campaign said in a formal statement that Walz has been a strong leader and has enacted policies that have cut taxes for working families.

“After Donald Trump devastated our state’s economy, Governor Walz led Minnesota with strong leadership, competent management and smart policies,” said Harris campaign spokesman Charles Lutvak. The state is back on its feet — cutting taxes for working families and reaching the lowest state unemployment rate in history.

“Every day until November 5th, Trump must defend his shaky record and unpopular anti-growth agenda against the Harris-Walz team’s vision to promote business growth, create jobs and lower costs for the American people. .