To the editor:
Launching a technology start-up business requires overcoming financial, regulatory, legal, marketing, organizational, and technical challenges.
One challenge, for Minnesota start-up businesses, that was not expected, was the passage of the 2013 Minnesota Omnibus Tax Bill by the DFL-controlled Legislature that was signed by the DFL governor in May 2013.
This law added a 6.875 percent sales tax for business-to-business transactions for telecommunications services, equipment repair and maintenance services, and warehousing services.
A start-up business is often not profitable while they are designing and developing their product. Owners risk their own money during product development since a Small Business Administration backed loan from a bank requires three years of business profitability as demonstrated by business tax returns and a debt repayment plan.
A software start-up business makes extensive use of telecommunications services, as well as, equipment repair and maintenance services as dedicated employees are not available to perform these duties. These sales taxes were imposed on start-up businesses even when they are building their product and not yet making a profit.
State Rep. Anna Wills, R-Apple Valley, voted against these business-to-business sales taxes. Having a background in a family-owned small business, she understood the impact of the tax on small businesses. She recognized that technology start-up businesses create high paying jobs.
Wills showed leadership by introducing legislation to repeal these damaging business-to-business taxes on the first day of the 2014 legislative session. The DFL-controlled Legislature and DFL governor agreed with her when they flip-flopped their position and repealed these sales taxes in 2014. Only 20 percent of start-up businesses succeed. The last thing that we need is to have the “Minnesota tax monkey” on our backs.
Wills was right on the issue and the DFL was wrong. That is why I am supporting Wills for re-election to House District 57B.