Fellow truckers, this is a time to be heard. Minnesota’s family-owned trucking companies and the communities they serve will be hit especially hard by Governor Dayton’s proposed budget.
Our best reading of the Governor’s proposed budget tells us that trucking services will be assessed the sales tax. Eighty five percent of Minnesota’s manufactured tonnage moves on a truck. These manufactured goods are moved multiple times, either as raw commodities or components, before they achieve their finished state.
Governor Dayton’s plan will add 5.5 percent to the cost of each of those moves, creating a negative multiplier effect. Trucking companies simply don’t have the margin to absorb those costs.
They also don’t have the margin to cover the additional sales taxes they will pay for obtaining critical accounting, legal and consulting services. Those costs will have to be passed on to the consumer as well.
This proposal will impact pass-through business as well. There is no question a truck driver needing repair work will avoid getting the work done in Minnesota if he can avoid it.
We believe the Governor’s income tax proposal will negatively impact the ability of our family-owned businesses to grow and remain competitive. Since most Minnesota trucking companies are organized as Subchapter S corporations (S Corps), they will see their personal state income tax rate increase by over 25 percent.
These higher taxes will directly impact the ability of these family-owned businesses to upgrade or add to their fleets, effectively stifling job creation. Furthermore, increasing the state’s per capita income tax ranking from eighth to fourth highest in the nation will not attract trucking companies to do business in Minnesota.
When you add this state income tax increase to the new federal taxes on Medicare mandated under the Affordable Care Act, S Corps would effectively pay 11.61 percent more than C corporations (C Corps) in Minnesota. Projected revenues under the Dayton plan would drop dramatically if S Corps convert to C Corps to avoid those taxes.
It is time to remind legislators that 68 percent of Minnesota communities rely exclusively on truck transportation for everything transported in and out of those communities. Those communities are going to feel the reverberations of a bigger freight bill with no value added.
Truckers, the threat is very real. The governor is serious, so it is critical to make your voice heard. Send e-mails, place calls and join us in Saint Paul on March 14 for our annual Truck to the Capitol.