State Representative Paul Torkelson of Hanska has said that an unnecessary tax increase on local business owners will take effect on March 15 unless the legislature acts.

Record-setting unemployment claims depleted Minnesota’s Unemployment Insurance (UI) Trust Fund at the start of the pandemic. This caused a debt of more than $1 billion to the federal government, which serves as the backstop when states deplete their UI funds. To make up for that loss, payroll tax rates will increase in a month on business owners by 15% or more to replenish the fund.

Torkelson said, “With a $7.7 billion budget surplus, and more than $1 billion in federal COVID relief funding waiting for allocation, there is no reason to be raising taxes on anyone.”

In the Minnesota House, a bill was heard recently that would allocate more than $1 billion in American Rescue Plan Act of 2021 funding to replenish the Unemployment Trust Fund.

Torkelson said, “If the Minnesota House follows the Minnesota Senate’s lead by approving a stand-alone bill that eliminates this unnecessary tax increase, it would likely pass unanimously. Our local business owners have struggled mightily over the past two years, and we need to act quickly before they are hit with another senseless financial burden.”