Curing Minnesota's Tax Ails: How Would Presidential Candidates Affect the Burden?

Date: March 15, 2016 Last Edit: March 17, 2016

With the delegates now dispersed, here’s a closer look at how each candidate would affect small businesses in the state.

Curing Minnesota’s Tax Ails: How Would Presidential Candidates Affect the Burden?

Minnesota businesses are in need of a change.

The state has ranked as one of the most challenging for small business in recent studies, in large part due to a burdensome tax system. Minnesota came in at 47th in the country for business taxes, 49th in business property taxes for rural areas and 45th in metropolitan areas, according to the recent State Business Tax Climate Index report. 

Could this year’s election usher in a better era? Let’s take a look at the candidates—including Marco Rubio and Bernie Sanders who scored big wins in Minnesota on Super Tuesday—and how friendly they are toward small businesses, with a particular eye toward their tax plans.

The Top 3 Republicans (According to the Polls)

Marco Rubio

The Florida senator garnered 36.5 percent of the vote during Minnesota’s primary, earning him his first win of the campaign season. The crux of Rubio’s tax plan involves reducing the federal corporate income tax rate to 25 percent from 35 percent. He also vows to repeal all business taxes associated with the Affordable Care Act, such as the penalty for small businesses with more than 50 employees who do not offer healthcare to their employees. Rubio’s plan would also reduce the tax burden on consumers by restructuring federal tax brackets into a three-rate system of 15, 25 and 35 percent, down from its highest level of 39.6 percent.

Ted Cruz

Finishing in second place at the Minnesota caucus, Cruz’s tax plan eliminates corporate and payroll taxes and replaces it with a 16 percent business transfer tax. In this system, business revenues would be taxed at the end of each quarter, instead of a tax being applied to each business transaction. This would significantly reduce the tax burden of Minnesota small business owners, according to the Tax Foundation.

Donald Trump

Trump posted a rare third place finish in the Minnesota caucus. The Republican front-runner’s tax proposal drastically cuts federal corporate income tax from 35 percent to 15 percent. The plan also reduces personal income tax, topping out with a top marginal tax bracket of 25 percent. The tax cuts would free up Minnesota business owners and consumers to spend more and spur economic growth.

The Democratic Candidates

Bernie Sanders

The self-proclaimed democratic socialist won big in Minnesota on Super Tuesday, defeating Hillary Clinton by a 24 percent margin. In contrast to Republicans, Sanders’ tax plan would raise federal taxes for consumers and small business owners. Sanders would add four new upper-level income tax brackets to raise federal revenue. He would also implement a 6.2 employer-side payroll tax to fund healthcare and paid family leave. Overall, this plan would reduce incomes for both businesses and consumers in an effort to fund social programs.

Hillary Clinton

Minnesota was one of four states the former secretary of state lost on Super Tuesday. Clinton’s tax plan creates an additional tax bracket for earners making more than $5 million, taxing this income at a rate of 43.6 percent. She also champions the “Buffett Rule,” which taxes earners making more than $1 million at a rate of 30 percent. The plan would result in 311,000 fewer full-time equivalent jobs, according to Tax Foundation estimates.

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