Unlike some surrounding states, Minnesota business owners get socked both locally and from the state when it comes to property taxes.
According to the Minnesota Chamber of Commerce, the statewide property tax represents about 30 percent of the total property tax bill for businesses. All businesses pay this fixed cost - all sizes, all locations, whether they own or lease property. The chamber says businesses pay the tax regardless of whether they post a profit or record a loss. And most leases require tenants to pay property tax.
Jim Pumarlo, director of communications with Minnesota Chamber of Commerce, visited with the Independent Thursday. Marshall Chamber of Commerce Director Brad Gruhot and Runnings Supply, Inc. Human Resources Director Roger Evert also joined the meeting.
All three were promoting the Minnesota Chamber of Commerce agenda. And the business property tax is high on that agenda list.
"Minnesota is a high-tax state. We have good services. We expect to pay for those," Pumarlo said.
"The thing we hear from business owners is that there becomes a kind of tipping point."
The tipping point, according to Pumarlo, is an automatic inflator (controlled by inflation index) attached to the statewide property tax for businesses. While the Chamber would like to see the property tax for businesses phased out, Pumarlo says the automatic inflator should be eliminated right now.
The Chamber and the United Jobs Coalition cites the following statistics:
* Businesses have 12.4 percent of the total property market value, but pay 32 percent of the total property tax
* Businesses have an effective tax rate of 3.88 percent, higher than homes (1.30 percent) and farms (0.53 percent)
* Businesses have the highest class rate of 2.0 percent
"As a business owner, you can only absorb so many high costs, so you have to spread them out," Pumarlo said. "There are three ways you can spread the cost. You may increase the price of your goods and services. But you have to be sensitive to the market. How much can you withstand?
"If you have shareholders, you make a lower rate of return for shareholders, or you put it on the back of your business - employer wages and benefits. It's a consumer tax. It hits the every-day consumer."
Pumarlo makes some solid points that hit home here in southwest Minnesota. Minnesota commercial property taxes are among the highest in the nation. While the state is No. 7 in the nation for metropolitan businesses, it's No. 2 for rural properties.
These heavy property taxes affect small and large. Evert represents a company that makes its corporate headquarters right here in Marshall and has 18 locations in the state.
"That (property tax increases) adds up in a hurry," Evert said.
Gruhot cites the many small businesses along Main Street that also pay a heavy price.
And every year, that tax increases. There is no relief right now. And that's what the chamber is looking for its members - some relief.
Getting rid of the inflator is a no-brainer when taking into consideration the amount of surplus the state has generated.
A number of proposals have been introduced in the Legislature. The smallest of these proposals simply aims to eliminate the automatic inflation provision of the tax.
"We don't think anything in government should be on auto pilot. If you need the money, take the vote," Pumarlo said.
"It might be a tough vote, but you should take the vote."
That makes a lot of sense. Maintaining a government budget surplus shouldn't be only put on the backs of business owners.
