Editorial counterpoint: Tax breaks aren’t the main thing Main Street needs


As a small business owner and leader of the Minnesota Main Street Alliance, a network of business owners across Minnesota and the country, I appreciated the general sentiment that the Star Tribune Editorial Board recently expressed in advocating for using Minnesota’s large budget surplus to invest in both frontline workers and relieve businesses facing UI tax hikes (“A Balanced Approach to Solving a Mess” , December 20).

However, I know firsthand that what our small businesses need is often different from the policies advocated by the Minnesota Chamber of Commerce.

The problem with the room is real. There is a huge deficit in the Unemployment Insurance (UI) fund of $ 2.4 billion! Struggling with additional costs naturally arouses the fear of many business owners who are still navigating uncertain economic waters. However, not all businesses need help.

Data from the US Department of Commerce recently revealed that corporate profit margins are currently the highest in nearly 70 years. Does Minnesota really need to cut unemployment insurance rates for giant corporations like Amazon, which already receive tax subsidies that companies like mine don’t?

Moreover, although the trust fund deficit is large, examining the experiences of individual companies reveals that this is not a moment of panic for companies.

The current law provides for a 15.8% increase in the unemployment insurance rate paid by a company, which ranges from 0.5% to 9.4% of salary. The exact rate a company pays depends on what’s called its experience rate, which increases as you lay off workers. Importantly, the legislature has frozen experience ratings since the pandemic in order to protect harmless businesses that have been forced to shut down.

So what does this look like in real life?

The unemployment insurance rate for next year in my business is 0.78%, so the 15.8% increase means an additional tax bill of 0.12% of salary. It’s still real money in what looks to be another tough year, but it’s not a primary concern that deserves much of our surplus to be used. And at this point, unemployment tax rates have already been set and mailed for 2022.

Rather than trying to undo it somehow or wait until 2023, we should be crafting a small business agenda that addresses the real challenges we face.

With the spread of the omicron variant, free and easily accessible quick tests for employees would be a good place to start and help us run a safe workplace.

At the start of the pandemic, the federal government made tax credits (FFCRA) available to help us pay workers who have to stay home due to quarantine, but the program ended even though the problem was not the case. Instead of temporary tax credits, Minnesota should finally make paid family and medical leave available to everyone. No one should have to worry about how they will make ends meet just because they are recovering from an illness or caring for a new baby.

Across the country, more than 10 million workers left their jobs in 2020 due to caregiving responsibilities, with black and Hispanic caregivers facing disproportionate pressure to leave. Some 71% of adults with access to paid family medical leave said it helped them keep working, and more than half used the allowance during the pandemic.

A recent analysis from the Minnesota Department of Employment and Economic Development (DEED) found that Minnesota has less than one job seeker available for every open position in the state. DEED’s Job Vacancy Survey shows that small businesses are hit hardest by this labor shortage. In addition to paid family leave and medical leave, investing in affordable child care and reducing health care costs are additional measures that will not only empower families, but bring people back into the workforce and back into the workforce. will help local employers compete for talent on an equal footing. .

If policymakers seek to help struggling small businesses with immediate financial support, they could provide grants directly to those businesses on an equitable basis. This could be of much more help than transferring funds to the UI fund and could be focused on struggling businesses during the pandemic.

There are a lot of other things we can do, but the main point here is that investing in Minnesotans is good not only for our residents but also for our small businesses. Too often the chamber will use a legitimate problem, like UI taxes, to pit the needs of workers against those of businesses, but we can build an economy in Minnesota where both can thrive.

So that means yes, let’s also make sure we support our healthcare workers and other frontline workers in the economy who have stepped up and put their own safety at risk to keep our community functioning. They are the ones who deserve the most support.

Danny Schwartzman is the owner of Common Roots Cafe and Common Roots Catering in Minneapolis.


Comments are closed.