Schafer: Professional firms won't stick around for new tax

  • Article by: LEE SCHAFER , Star Tribune
  • Updated: February 2, 2013 - 4:07 PM
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  • 1 - 9 of 9
thehoffersFeb. 2, 1311:06 PM

They've already broken the wings of the golden goose of quality employment by taxing goods all the way to Asia. Now they want to kill it completely by expanding the DFLs insatiable appetite for taxes even further. I suppose only Dayton chooses not to remember his campaign promise to protect the middle class.

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bzimmerma3Feb. 3, 13 8:06 AM

I lead a small local consulting firm therefore we would be directly affected by a professional services tax. As a MN citizen interested in what's best for our state, I'm not entirely opposed to this tax, primarily because Dayton has a valid point about having a large services-based economy. However this tax won't be nearly as cut and dried as a sales tax on goods. Nor will it result in nearly as much net new revenue as Dayton expects. I currently employ 4 well-paid 'subcontractors' to deliver our services to clients. But now I must pay a 5.5% premium for their services (which I can't pass along to clients thus it cuts into my profit margin - profit which today gets taxed on my personal income). And when my clients pay the 5.5% premium on my firm's invoices, it effectively double-charged tax on the same set of services. You'd be surprised how many service-based businesses are run with subcontract labor because it provides businesses with flexibility to easily ramp capacity up or down. It also improves overall quality and price because subcontractors regularly compete to win your business (the way a free-market economy is supposed to work). In my opinion a tax on services needs to exempt subcontract/subordinate services and 2% is a much more appropriate rate.

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kkjerFeb. 3, 1311:35 AM

This tax will kill small service providers like myself. I have an HR consulting business with myself and a few employees. I am able to compete with the big boys because I can offer the same services at a lower price. I have clients in 30 states and if I have to charge a sales tax I am no longer competitive. Since my kids and grand kids are in Phoenix, if the sales tax goes into effect, I will have no choice but to let my employee go and move. It doesn't make any difference where I am at, it makes a difference what I have to charge. What Dayton isn't thinking about is small companies like myself can pick up and move and don't even have to change our phone numbers anymore.

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MN's loneliest REPFeb. 3, 13 4:29 PM

Kkjer....you had it pegged when you said "Dayton isn't thinking".... This guy will create such an anti-business environment that not just small businesses will leave, but why would 3M, Target, Medtronic, Hormel, United Health, Ecolab or any of the other major employers stick around. Dayton = Anti-Business.

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smarterthanuFeb. 3, 13 4:35 PM

No problem. As long as there is money to be made someone will take the place of any departing businesses.

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george13Feb. 3, 13 5:08 PM

I speak for everyone when I say we have WAY too many lawyers. It won't hurt anyone if we get rid of a few of them.

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pseudonymFeb. 4, 1310:24 AM

george13 You must come from the same business background as Dayton . . . oh wait, that's right he has no business background. Don't forget, when law firms like mine leave, it's not just the lawyers (and their income tax) that leave, it's the $50k+ jobs of legal assistants and paralegals that go with them.

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copper88Feb. 5, 1311:55 AM

My goodness! There's a lot of whining and crying about this business tax. Maybe we should just go back and undo their property tax decreases they got ten years ago. Those didn't really work anyway.

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stevee952Feb. 5, 13 3:23 PM

Interesting ... all taxes, no big plans on spending cuts and entitlement cuts. But then again what else should we expect from a Democrat.

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