Leading Minnesota business organizations are enthused about President Trump's tax-cut plan, saying it could spur investment, create jobs and otherwise boost the state and national economies.
In a news conference, U.S. Treasury Secretary Steven Mnuchin said Trump's tax plan is unprecedented in its scope, both for taxpayers and businesses. "Under the Trump plan, we will have a massive tax cut for businesses. And massive tax reform and simplification," Mnuchin said.
On the corporate side, Trump's plan would slash the top marginal tax rate from 35 percent to 15 percent. It would eliminate the estate tax, and taxes on capital gains and dividends would be cut.
"This is a very positive first step," said Charlie Weaver, executive director of the Minnesota Business Partnership, whose members include the CEOs of Minnesota's largest employers.
"I think it will result in a stronger economy, jump start the economy, and grow jobs in Minnesota," he said. "That's a good thing."
Weaver said the tax plan could be especially beneficial for companies and industries that can't find ways to lower their tax rates as readily as some firms in the energy and other sectors can.
"Utilities and some other sectors may not pay the full 35 [percent]," he said. "But retailers, for example, like Best Buy or Target, they pay nearly that full 35 percent."
Multinational firms can reduce their tax burdens by keeping profits made abroad out of the U.S. Administration officials said international firms would have a one-time tax on overseas profits, and that would provide an opportunity to bring back trillions of dollars in profits earned overseas — without facing high taxes.
That prospect is especially appealing to many of the medical device firms operating in Minnesota.
Shaye Mandle, CEO of Medical Alley, whose members include the state's leading medical technology and healthcare companies, said encouraging companies to bring overseas profits back to the U.S. could pay off handsomely.
"That could be a great boon not only to companies investing in jobs within their companies, but also a lot of capital could be invested here in the United States in new companies and new innovation," Mandle said.
Taxing overseas profits at lower rates could also keep companies from following the lead of Medtronic and other big firms that have relocated their legal headquarters overseas to lower their taxes on foreign earnings, he said.
Without lower taxes on foreign profits, Mandle said that "the risk to the United States is a continued stream of companies in health care and other industries looking to domicile in other nations with significantly lower tax rates."
The head of the Minnesota Retailers Association, Bruce Nustad, said he was glad to not see something in Trump's plan — the border adjustment tax.
That policy, favored by House Speaker Paul Ryan, would slap a tax of 20 percent on imported goods.
Target issued a statement, too, saying it was encouraged to see that the border adjustment tax is not a part Trump's plan. The retailer said such a tax would raise prices for American families on everyday essentials.
Trump's plan promises to deliver big savings to the owners of businesses who now have profits taxed on personal returns.
Minnesota Chamber of Commerce senior vice president Bill Blazar said that's how the vast majority of small and mid-size firms operate in Minnesota. "When their business makes a profit, that profit shows up on their personal income tax return," he said. "Currently, that top rate is a little less than 40 percent. It would go down to 15 percent."
Of course, Blazar said there is the matter of how the Trump tax cuts would affect the federal budget and deficit. Blazar said that issue can't be ignored, no matter how enticing tax cuts are.
"As much as we want tax relief, we want make sure that we're doing it in a fiscally responsible manner," he said. "We've got to debate that issue: how to pay for it. You can't just ignore that."