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Lawsuit Challenges Tax-Free Zones

ST. PAUL-The state's JOBZ and biotech growth programs are targeted by a lawsuit that argues the tax breaks are unfair and unconstitutional. The operator of a Bloomington mobile-home park are among the plaintiffs.

By Jim McCartney | Updated on March 20, 2005

ST. PAUL-Two State of Minnesota programs aimed at encouraging business development through a variety of tax breaks, including those on property taxes, have been challenged in court and may be headed for a constitutional challenge. A lawsuit claiming the Minnesota JOBZ program and a similar effort aimed at attracting biosciences companies give unfair competitive advantage to selected companies was filed Friday in Ramsey County District Court on behalf of two Minnesota taxpayers.

Under the so-called JOBZ program, approved by the legislature in 2003, businesses that move into designated tax-free zones, or expand in them, pay almost no taxes. That includes paying no sales taxes, no taxes on property improvement or on equipment purchases, or income taxes.

Through January, the state lists the total number of JOBZ deals at 125, representing about 2,900 retained jobs, 1,932 new ones and $165.8 million in capital investment. Many of those deals have been approved with little local controversy.

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