Tax changes: Businesses push back, Dayton digs in


Battle lines are coming into focus as the opening volleys are fired in the fight over Gov. Mark Dayton's proposed revamp of Minnesota's tax system.

The Star Tribune suggests the outcome of the debate could define the political career of the Democratic governor, who is also a former U.S. Senator.

On a day when business groups sharpened their attacks on the idea of expanding a lowered sales tax to include business services, Dayton defended his plan in a speech before newspaper executives.

Business groups are particularly critical of the part of Dayton's plan that would apply the sales tax to services provided by ad agencies, accountants, and lawyers among others. They say the cost of that 5.5 percent tax would be passed along to customers, which would cut into business and job creation. The CEO of one advertising firm called the governor's plan insane and rhetorically asked the Pioneer Press, "Why would we operate in Minnesota?"

Establishing a Wisconsin branch may not be a solution, though. Dayton's revenue commissioner, Myron Frans, tells MPR Minnesota purchasers of those services would still have to pay the tax. Frans says critics should consider the sales tax in the context of the entire plan, which also includes cutting corporate taxes and freezing business property taxes. The opposition is no surprise to the Dayton administration. Frans says of those fighting the tax on business services: "The fact of the matter is they've been untaxed in Minnesota ... and it's time for them to pay their fair share like everybody else."

Sounds like the battle has begun.

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