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Sen. Keith Langseth, DFL-Glyndon, studies paperwork Thursday while listening to testimony about Gov. Tim Pawlenty's proposed business tax breaks.

GOP, DFL attack Pawlenty's proposed business tax cuts

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Proposed business tax cuts would do little to immediately boost Minnesota's economy, Gov. Tim Pawlenty's top aides heard Thursday from a fellow conservative Republican -- as well as Democrats who control the Legislature.

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The toughest attack on Pawlenty's plan in a Senate Taxes Committee discussion came from Sen. Julianne Ortman, R-Chanhassen, who normally sides with the governor.

"In order to avail itself a tax credit, a small business must have money," Ortman told Revenue Commissioner Ward Einess. "There is no money in the economy. ... They are not going to buy the new equipment and are not going to get the tax credit."

What really is needed, she added is simple: "We need to have cash in the economy to buy things."

The unusually harsh GOP criticism of Pawlenty's proposals set the scene for a tough battle ahead.

In his State of the State speech last month, Pawlenty introduced the "Minnesota Jobs Recovery Act," which features a variety of business tax cuts.

On Thursday, Einess said that that the administration's top priority is restoring jobs, but the tax package "is not a short-term fix and it was not meant to be."

Ortman said the timing of Pawlenty's proposal "may not be the best. ... It is going to take years to create jobs in our economy."

Pawlenty's proposed business tax cuts include:

- Cut business tax rate from 9.8 percent to 4.8 percent in the next six years.

- Tax credit for investing in businesses.

- Taxes reduced on equipment purchases.

- One-year tax deduction for equipment purchases, instead of spreading it out over several years.

Senate Tax Chairman Tom Bakk, DFL-Cook, said that just one of the proposals would be felt immediately. An immediate tax break for companies that buy equipment could spur spending, he said.

"Maybe it will stimulate a little bit of the economic activity," Bakk said.

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