Dear Congress: A federal tax reform wishlist from the Northland
When Congress gets back to work Sept. 5, tax reform is supposed to be near the top of the agenda, though few concrete proposals have escaped the halls of the Republican-controlled Senate and House of Representatives.
Whether it's the first major reform in a generation or a small package of tweaks, changes to the tax code could very well reach the president's desk in the next year.
Acknowledging that it can be difficult to target national tax policy to regional needs, a handful of experts offered their take on what could be done at the very top to boost the Northland economy.
Minnesota Chamber of Commerce vice president of tax and fiscal policy
"The ultimate goal with any tax reform should be pro-growth and spurring economic activity."
"How do we lower both our corporate rate as well as pass-through company rates? We want to see both those rates lowered."
"Then how companies are taxed worldwide — we need to follow the rest of the nations on this and tax where it's earned."
"When looking at federal reform, the next step we want to see is how we make those changes at the state level as well. The last time we had major reform was 1987 under Gov. Rudy Perpich."
College of St. Scholastica economics professor
"Our entire tax code needs an overhaul. The last systematic revision was in 1986. That's before the internet and email, before China's revival and the USSR's fall and before NAFTA and the WTO. In other words, our tax code is obsolete."
"While most of the attention so far has been on corporate tax reform, about 80% of tax revenue comes from income-based taxes."
"The discussion of tax reform has to be done with an eye on the government's deficit. As our population ages, the deficits are automatically going to increase. If tax reform becomes a tax cut, the deficits could become dangerously large. If tax reform stays 'revenue neutral,' any tax cut in one area will have to be offset with a tax increase in another area. And that's where the economics end and the politics start."
Minnesota Power corporate communications manager
"Without any specific legislative proposals from Congress, it is very hard to predict if Minnesota Power will be positively impacted by tax reform, but we are supportive of a reduction of the corporate income tax rate as that benefit would flow to our customers in the form of lower electric rates, which benefits all of our customers in general and our industrial customers specifically in helping them compete in a global marketplace. Due to lack of full details of what will be included in federal tax reform, we will be closely watching to ensure the greatest benefit to our customers."
Northspan Group director of marketing, research and analysis
"From a business development perspective, we support any changes that will free businesses to invest more in their local operations, while at the same time ensuring fiscal stability. Any changes need to be long-term and create predictable standards so that businesses can plan for the future with as much certainty as possible. We also hope that any new tax regime maintains or expands the incentives we've used in the past to stimulate business growth in the Northland."
"Simplification. Our personal taxes alone are crazy complicated, and it's much worse in the business and corporate world."
"The overall corporate tax rate — you can't just lower the overall corporate tax rate and somehow think trickle-down economics is going to result in more taxes getting paid in everywhere. How do we reduce that top-down rate and spread the burden onto those that are getting the benefit?"
"The other big area we have to figure out: We have trillions of dollars hanging out there overseas. I think in the past we've tried, and it's been discussed, about a tax holiday and getting those funds back in the country. But it can't just be used to get that money back and you buy back shares or get back a big dividend. We need something that would encourage onshoring."
What our delegation says
U.S. Rep. Rick Nolan, D-Minn.
"Tax reform must benefit the middle class, ensure that Wall Street millionaires and billionaires pay their fair share and stop incentivizing multinational corporations to move their jobs overseas. We can create millions of good-paying jobs by restoring a fair distribution of wealth. With more money in their pockets, working families boost our economy, buying homes, taking vacations, helping kids through college and saving for a secure retirement."
Sen. Amy Klobuchar, D-Minn.
"As I travel across Minnesota I hear from businesses and workers that we need to work together on comprehensive tax reform to lay the groundwork for expanded economic growth across the country. If done right, we can close loopholes, bring back money from overseas to fund infrastructure projects here at home, give local businesses the ability to compete against out-of-state internet retailers and provide incentives to keep jobs in America."
Sen. Al Franken, D-Minn.
"I will be in communities across Northeast Minnesota this week to meet with businesses, local officials and community leaders about the issues they care about. And I know that one of the main topics of conversation will be tax reform — and for good reason. Like me, they believe the economy needs to work better for all Minnesotans, and not just for those at the very top. And one way to take steps towards that goal is to pass a bipartisan tax reform law that works for our local businesses and keeps more money in the pockets of middle-class Minnesotans. I look forward to talking with community members across the region about what they want to see in tax reform, and I plan to take what I learn and bring it to Washington as we begin the tax reform debate."