New Tax Breaks Expected to Generate 5,000 New Jobs in Minnesota

Published On: 5th February 2014

From the internet

A new economic development program in Minnesota has been put in place to replace one that was only aimed at rural Minnesota. The new plan gives officials $24 million to attract business expansion by giving businesses tax breaks of between $1,000 and $3,000 per job they create.

This new program, launched this month after approval by lawmakers in 2013, said they expect the program to create 5,000 new jobs. This new Job Creation Fund will benefit Minnesota businesses and businesses from other states if they create at least 10 new jobs in the state of Minnesota and invest at least $500,000 of their own money in expanding their existing facility or building a new facility.

State officials estimate that the new program will produce a lot of new investments. The businesses will receive the money through business tax breaks, which are provided yearly as long as the firms maintain the new jobs they create. If the new jobs are not maintained, then the tax incentive can be lost.

The new program is replacing the Job Opportunity Building Zones program that former Governor Tim Pawlenty put into place. The old program focused on rural Minnesota because the Legislation at the time felt that rural Minnesota needed the most help.

The Job Opportunity Building Zones program, or JOBZ, provided businesses with a break from most state taxes and allowed businesses to expand into rural areas. The new program works throughout the entire state. However, businesses in rural areas may get the tax breaks for a seven year period, whereas the businesses in the Twin Cities have a five year limit.

When Governor Dayton discussed the new program, he shared the success story of an agriculture equipment manufacturer. This particular company has become the largest employer within its region and it continues to grow. Dayton says that the JOBZ tax breaks helped attract the expansion from the company’s home base in another state.

In order for businesses to apply for the new program, each job must produce an income of at least $26,000 annually. The tax rebates that the businesses receive will increase as salaries increase. This is an effort to attract more jobs that pay more. The aid is also capped at $1 million per year per business.

These new job program tax breaks can be used in addition to the $1 million in available grants and loans from the Minnesota Investment Fund that is aimed at helping businesses expand. There are also other state programs available and they can be used to pull more business into Minnesota.

After Minnesota was accused of driving business away because of sales taxes and issues with reciprocity agreements with neighboring states, this is the opportunity for any of those issues to be rectified so that businesses can receive something back on their taxes while facilitating growth. If the program produces the jobs that it is anticipated to produce, this new program could become a more permanent incentive for businesses to grow and offer their employees competitive wages.