Bill SF5422, HF5186

Author
Brayden Tremain
Winona Area Public Schools
Senate

Essay

Brayden Tremain
Model Legislature 2024
SF5422 Pro-Con Essay
Lowering Franchise Tax Rate
SF5422 is a bill that would lower corporate franchise tax from 9.8% to 8.25%.
According to the Tax Foundation, it would be good to cut the tax rate to encourage
businesses to work inside of Minnesota and give the company resources to improve the
workplace and pay higher wages. Studies also show that most of the time higher
corporate tax rates end up falling back on the workers, and not the people who own the
company. This is also backed up by the National Retail Federation which states that
“the repercussions of a higher corporate tax rate would reverberate significantly onto
consumer prices.”. They also say that a lower corporate tax rate would allow companies
to expand which would open up jobs and therefore would make our economy stronger.
On the other hand Science Direct states that after conducting their studies that
results were ambiguous, which means that there could be little to no benefit at all or
maybe even repercussions. Science Direct also brings up multiple papers with
conflicting results; these results range from overwhelmingly positive to overwhelmingly
negative. ProCon brings up that a lower corporate tax rate could possibly weaken the
economy, stating that Johnson Controls moved from Wisconsin to Ireland. This move
caused the economy to weaken through loss of jobs, business, and overall circulation of
money. In conclusion, SF5422 is a risky bill but if it pays off then it will stimulate the
economy, bring more jobs, and bring more businesses to Minnesota.
Sources(in order of appearance)
Tax Foundation- https://taxfoundation.org/research/all/federal/benefits-of-a-corporate-
tax-cut/
NRF- https://nrf.com/blog/5-reasons-why-lower-taxes-mean-better-deals-consumers-
and-retailers
Science Direct- https://www.sciencedirect.com/science/article/pii/S0014292122000885
Pro Con- https://corporatetax.procon.org/