Legislative Update: Small Business Caucus and Unemployment Insurance Tax Cut

Small businesses are a crucial part of the engine that makes Minnesota’s economy run. As such, the Legislature took action last session to support small business by enacting one of the largest business tax cuts in Minnesota history. Our work to support small businesses is ongoing. The legislature has convened a Small Business Caucus that has embarked on tours around the state to learn more about ways we can support innovation and expansion in our local businesses.

Legislative Small Business Caucus Tours

I am a member of a bipartisan legislative Small Business Caucus. The group is working with small businesses across the state to develop ways to economically benefit small and medium-sized businesses and create jobs.  The Small Business Caucus will use this information to recommend pro-small business legislation for the 2014 session.

Small businesses are a crucial part of Minnesota’s economy and we want to hear from them about what helps them succeed and create more jobs in our local economies. We’re working to put their ideas into action and help these employers to be more competitive. It’s important that we focus as legislators on how to clear up red tape and make it easier to do business in Minnesota.

We recently toured 10K Solar and Quality Bike Products in Bloomington and Geronimo Energy in Edina, while also making a brief stop at TJ’s of Edina. The caucus has also toured businesses in the Monticello area and we plan to continue tour until session convenes in late February. 

If you are a small business owner and would like to meet with the Small Business Caucus, please contact me. We would really appreciate hearing from you!

Unemployment Tax Cut Will Save Minnesota Businesses $346.5 Million

Minnesota businesses will save $346.5 million over two years starting in 2014, thanks to a cut in unemployment insurance taxes approved earlier this year by the Legislature and signed into law by Governor Dayton.

Effective Jan. 1, 2014, for-profit employers will pay lower taxes for funding the unemployment insurance trust fund, which provides temporary jobless benefits to workers who are laid off. 

More than 120,000 Minnesota businesses will be positively impacted by this tax cut, which may be the largest business tax cut in state history. This is a responsible, targeted tax cut that will provide businesses with more money that they can then use to hire new workers, expand their business, and grow our economy.

The trust fund went into deficit during the Great Recession because of growing demand for unemployment insurance benefits. In response, the state raised the unemployment insurance tax rate on businesses and borrowed money from the federal government so that it could continue paying temporary benefits to Minnesotans who lost their jobs. But with the state economy improving and new claims for unemployment insurance benefits at their lowest level in nearly a decade in Minnesota, the trust fund now has reserves of $1.2 billion, enabling officials to reduce the tax rate on businesses. 

Currently, Minnesota businesses pay unemployment insurance taxes on the first $29,000 of annual wages per employee. Effective Jan. 1, the base tax rate they pay on that amount will be reduced from 0.5 percent to 0.1 percent. An additional 14 percent assessment that employers paid on their total unemployment insurance tax bill also will be eliminated starting in 2014. 

The rate reduction for 2014 was contingent on the trust fund having a balance of more than $800 million as of Sept. 30, 2013. The rate reduction in 2015 is contingent on the trust fund having a balance of more than $900 million as of Sept. 30, 2014. State finance officials said they anticipate the trust fund level to exceed $1.2 billion over the next two years, well above the level required for reducing the tax rate. 

As always, feel free contact me with any questions, concerns, or ideas. You can reach me at rep.laurie.halverson@house.mn or 651-296-412. Thank you for the honor of representing you at the State Capitol.