ST. PAUL, MINN. -- Minnesota's family-owned trucking companies and the communities they serve will be hit especially hard by Gov. Mark Dayton's proposed budget, according to the Minnesota Trucking Association (MTA).
"Our best reading of the governor's proposed budget tells us that trucking services will be assessed the sales tax," said MTA President John Hausladen. "Eighty five percent of Minnesota's manufactured tonnage moves on a truck. These manufactured goods are moved multiple times, either as raw commodities or components, before they achieve their finished state."
"Governor Dayton's plan will add 5.5 percent to the cost of each of those moves, creating a negative multiplier effect. Trucking companies simply don't have the margin to absorb those costs, nor the additional sales taxes they will pay for obtaining critical accounting, legal and consulting services. Those costs have to be passed on to the consumer,” he added.
For generations, Minnesotans lived out the progressive argument that high taxes and high services were what gave the state its fabled quality of life. But the patience of business owners is being tried more than ever, as Dayton and the Democrats who now control the Capitol mull a menu of tax increases that would primarily hit company ledgers — just as most states are going the opposite way.
Dayton has proposed tax changes he says would make the system fairer and also bring in $2 billion in new revenue. Much of the gain would come from a state sales tax on "business-to-business" purchases like legal, accounting, banking and printing costs. Few states tax such services.
The MTA also believes the governor's income tax proposal will negatively impact the ability of those family-owned businesses to grow and remain competitive.
"Since most Minnesota trucking companies are organized as Subchapter S corporations, they will see their personal state income tax rate increase by over 25 percent," Hausladen said.
"These higher taxes will directly impact the ability of these family-owned businesses to upgrade or add to their fleets, effectively stifling job creation. Furthermore, increasing the state's per capita income tax ranking from eighth to fourth highest in the nation will not attract trucking companies to do business in Minnesota."
The organization reports that 68 percent of Minnesota communities rely exclusively on truck transportation for everything transported in and out of those communities.
Dayton wants the new money to eliminate a $1.1 billion state budget deficit. He also wants more for public schools and colleges, job-creation programs and low-income medical assistance, according to the Associated Press. He’s arguing that such amenities are what perennially put the state near the top of livability lists.
"I've heard this for 30 years and I'm not insensitive to it," Dayton said of the argument that high taxes make businesses look elsewhere. However, "I say we're not the lowest-taxed state, we're the best value for people's taxes."
On Feb. 19, MTA began an eight city tour of the state in Detroit Lakes to educate its members regarding the impact of the governor's proposal, plus other new federal trucking regulations. The remaining stops are: St. Paul, today; Rochester, Feb. 26; Mankato, March 5; Marshall, March 6; and Duluth, March 8.
Truckers can voice their opinion March 14 in St. Paul when the organization holds its annual Truck to the Capitol.
"You can bet legislators will get an earful when they meet with their constituents on March 14," Hausladen said.
AP reporters Brian Bakst in St. Paul, Scott Bauer and Todd Richmond in Madison, Wis., John Hanna in Topeka, Kan., Catherine Lucey in Des Moines, David Mercer in Springfield, Ill., and Sean Murphy in Oklahoma City contributed to this report.
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