Minnesota lawmakers have cut commercial and industrial property tax rates three times since 1997. NAIOP's study shows reductions made by the state Legislature "have not gone nearly far enough to create the level playing field we need to compete effectively with therest of the world," says Chris Patterson of Opus Northwest, chair of the NAIOP's legislative committee.
The study compared business property taxes in Minnesota with those of eight other states for atypical manufacturer with a 70,000-sf building, 99 employees and annual sales of $8.7 million. The tax burden on such a Minnesota manufacturer would be $141,521 in 2000, up 5% from the previous year.
In comparison, that same firm would pay state property taxes of $64,521 in Wisconsin, $61,521 in Iowa and $20,811 in North Dakota, according to the study.
Minnesota's official tax rate is 3.4% on business properties valued at more than $150,000. Butthe effective tax rate is actually 4.8% because of the impact of city levies and other add-ons,according to NAIOP. The state association supports reducing Minnesota's tax rate to 3% on business properties.
With the national economy slowing down and maybe headed toward a recession, Minnesota's high property taxes per worker ($1,400 vs. $200 per worker in North Dakota) will become a barrier to job growth, Patterson says.
In January, Gov. Jesse Ventura unveiled a plan to overhaul the state property tax system, including a 15% reduction in existing commercial and industrial taxes and adding a statewide business property tax. NAIOP has not taken a position yet on Ventura's tax plan.
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