Dayton poses $35 million tax credit

This plan would award businesses a certain dollar amount per hire.
January 25, 2012

With unemployment numbers across Minnesota reaching 175,000, Gov. Mark Dayton has proposed a tax credit for businesses that hire recent college graduates, veterans or unemployed.

Dayton and legislative DFLers proposed the “New Jobs Tax Credit,” a $35 million plan, in early January. It would reward Minnesota businesses with a $3,000 tax credit per person hired in 2012 and a $1,500 tax credit per hire from January to June in 2013.

According to the federal Bureau of Labor Statistics, the rate of unemployment for bachelor’s degree holders between the ages of 20 and 24 spiked to 13.1 percent in July 2011. However, that number dipped to 6.2 percent in November.

The unemployment rate in Minnesota is 5.9 percent as of November and Dayton predicted the plan would create 10,000 new private sector jobs this year.

The tax credit is part of a $775 million bonding bill proposed by Dayton last week.

“Our jobs plan will help businesses create good jobs for thousands of Minnesotans who are looking for work,” Dayton said in a statement. “We need to focus on what we know will work: investing in infrastructure, providing incentives to private sector businesses to create more jobs and training workers for high-demand careers.”

Rep. Linda Runbeck, R-Circle Pines, and chairwoman of the Property and Local Tax Division committee, said the proposal has good intentions but argued that some groups would be getting “special treatment.” She said employers are looking for characteristics of good workers when hiring, rather than choosing from a certain group or label of people.

Runbeck said that government is already too involved in the workforce and this plan would only continue the intrusion.

“A lot of us, including me, think government thinks it creates jobs. It really doesn’t. It kills jobs,” Runbeck said. “The government is already dictating and micromanaging so many of the aspects in the work environment.”

Todd Klingel, president of the Minneapolis Regional Chamber of Commerce appreciated Dayton’s effort but was skeptical of the proposal’s future.

“We’re eager to get as many people back to work as possible, and we applaud the governor’s efforts to stimulate job growth,” Klingel said. “However, the proposal may have an ill-fated result in the Legislature because to take money away from business and then give it to business isn’t always the best way to solve the problem.”

Klingel said there was no evidence that $3,000 will encourage businesses to hire workers but that he doesn’t remember a similar incentive of this nature in recent past.

The plan would be partially paid for by closing foreign corporate tax loopholes, as well as a new Internet sales tax, which could generate up to $3.5 million a year in revenue, Dayton said in a statement.

Under the current law, out-of-state retailers that don’t have a physical presence in Minnesota are not required to collect sales tax on online purchases used and consumed in Minnesota, according to the proposal.

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