Other Opinion: Legislature can agree on tax fix, if nothing else

While both parties can accept responsibility for the partisan thuggery that increasingly is failing Minnesotans and all Americans, it’s the unwillingness of Republicans right now to acknowledge (the) election ... that is pushing our nation to the brink.


This sounds troublingly familiar: The Minnesota Legislature has a problem with tax conformity that demands to be fixed. Right away.

Recall back in 2018 when state lawmakers failed to bring Minnesota’s tax code in line with federal tax rules that had been overhauled. Their failure turned Tax Day 2019 into a nightmare for many Minnesotans. And pricier, as many preparers charged more because of the unnecessary complexity left behind by St. Paul’s inaction and because of the extra time needed to essentially complete two different returns. Exacerbating all of that was the new federal tax law's elimination of a deduction for tax-preparation fees.

A year later, the Legislature passed a tax-conformity bill and then finally brought the state’s tax code more fully in line with the federal overhaul via a measure in the bonding bill in 2020.

The tax-conformity problem now? The federal Paycheck Protection Program for small businesses, meant to help them survive the economic hardships of the COVID-19 pandemic, features loans that are forgivable as long as they're used to cover qualifying costs and 60% to cover payroll. Minnesota, however, still does not automatically conform to federal tax law changes, so state legislation is needed so that forgivable PPP loans aren’t taxed here and the federal deduction is allowed here.

“More than 100,000 Minnesota businesses participated in the PPP loan program. Without (legislation from St. Paul now), many small and mid-sized businesses — already struggling due to revenue losses — will face further tax burdens,” the Minnesota Chamber of Commerce said in a statement this week. “It is critical to conform to federal tax law as soon as possible in the 2021 session as the final tax payment is due April 15.”


The chamber urged business leaders and others statewide to contact Gov. Tim Walz and legislators to urge immediate action. The 2021 session is already underway. “Urge them to conform to federal PPP tax loan forgiveness and allow deductibility of expenses on Minnesota income tax returns,” the chamber instructed.

It seems a no-brainer, ensuring Minnesota businesses that already are struggling are able to receive, without a tax penalty, the assistance allocated for them to get them through a period of unprecedented challenge.

It also seems an easy early-session bipartisan win, perhaps leading to more cooperation and compromise, better lawmaking, and a focus appropriately on the needs of Minnesotans ahead of the priorities of the DFL and Minnesota Republican parties.

Of course, nothing seems politically easy right now — not even at the state level or in the land of Minnesota Nice.

Minnesota Republicans need to work with DFLers — soon, this week even, with the need perhaps never greater for a bipartisan victory — to pass legislation so small businesses buoyed by the Paycheck Protection Program aren’t made to endure a tax penalty because of it. Like the rest of us, they’ve suffered enough.

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