HF 3568

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to employment; establishing a state living wage; imposing a tax on
employers that do not pay a living wage to their employees; using the proceeds
of the tax to increase the amounts of working family tax credits; amending
Minnesota Statutes 2004, sections 289A.01; 290.0671, by adding a subdivision;
proposing coding for new law in Minnesota Statutes, chapter 295.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin LEGISLATIVE FINDINGS; PURPOSE.
new text end

new text begin The legislature finds that:
new text end

new text begin (a) An individual employed full time, contributing talent and energy to the
individual's employer and for the good of the individual's community, deserves to receive
a living wage, which is enough to pay for food, shelter, clothing, transportation, child care,
health care, and other basic necessities for the individual's family.
new text end

new text begin (b) A growing number of Minnesota employees do not receive a living wage.
new text end

new text begin (c) Full-time employment at the minimum wage is grossly inadequate for employees
trying to pay for essentials. Even employees earning twice the minimum wage often
cannot meet living expenses, and if they can, they are only one illness or setback away
from becoming homeless.
new text end

new text begin (d) Some families spend nights in homeless shelters even though the parents are
employed full time because their wages are insufficient to cover the security deposit and
rent for an apartment, much less to afford the American dream of homeownership.
new text end

new text begin (e) Rising health care costs often force low-wage employees to make difficult
choices between health care for their family and other basic needs. As a result, low-wage
employees often neglect preventive care and put off necessary treatment until the medical
condition becomes acute, requiring more costly treatment.
new text end

new text begin (f) To minimize the hardship faced by these families, the state provides assistance to
them. Costly government services such as health care and housing subsidies are required to
support employees who do not receive a living wage. In effect, taxpayers are subsidizing
businesses that pay low wages by helping meet the living expenses of their employees.
new text end

new text begin (g) Minnesota taxpayers have spent billions of dollars over the years subsidizing
these companies and their inadequately paid employees.
new text end

new text begin (h) It should be the responsibility of employers who benefit from the hard work of
their employees to compensate those employees with wages adequate to purchase child
care, health care, housing, food and clothing, education expenses, transportation, and other
necessities of daily living and to enable them to save for retirement or disability.
new text end

new text begin (i) Although there are great disparities in living costs among families, it is clear that
few families can make ends meet without assistance if employees are paid less than $11
per hour, or $14 per hour if their employer does not provide health care benefits.
new text end

new text begin (j) Some employers, including some of the largest most profitable businesses in the
country, have become so dependent upon government subsidies to support their employees
that they need some time to restructure the prices of their goods and services in order to
pay a fair wage to their employees.
new text end

new text begin (k) Employers that fail to provide an adequate wage should be held accountable
for the burden placed on the state and its taxpayers when their employees are unable to
purchase basic necessities for themselves and their families.
new text end

new text begin (l) Until employers meet their responsibility to their employees, businesses should
pay at least a portion of the taxpayer's burden for every employee that they inadequately
compensate.
new text end

new text begin (m) A low-wage compensation fund supported by those employers could help raise
the household income for underpaid employees, thereby reducing their reliance on costly
government services.
new text end

new text begin (n) Initially, employers who do not pay all of their employees at least a living wage
should cover at least one-third of the taxpayer's cost from their failure to pay a living
wage. In time, these businesses should assume an increasing percentage of the taxpayer
burden unless they pay all of their employees a living wage.
new text end

Sec. 2.

Minnesota Statutes 2004, section 289A.01, is amended to read:

289A.01 APPLICATION OF CHAPTER.

This chapter applies to laws administered by the commissioner under chapters 290,
290A, 291, and 297A, and sections new text begin 295.61 to 295.63, new text end 298.01 new text begin , new text end and 298.015.

Sec. 3.

Minnesota Statutes 2004, section 290.0671, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Low-wage compensation surtax adjustment. new text end

new text begin (a) For taxable years
beginning after December 31, 2006, the amount of credits otherwise payable under this
section is annually increased as provided in this subdivision.
new text end

new text begin (b) By September 1, 2007, and each subsequent year, the commissioner must
determine the amount of the proceeds of the low-wage compensation surtax imposed
under section 295.61 from the previous calendar year.
new text end

new text begin (c) The commissioner must determine a uniform percentage increase in the credits
payable under this section for the current taxable year by dividing the amount determined
under paragraph (b) by the total amount expended for credits under this section in the
previous taxable year.
new text end

new text begin (d) The credits payable under this section for the current taxable year, as determined
under subdivisions 1 to 7, must be increased by the percentage determined under
paragraph (c).
new text end

Sec. 4.

new text begin [295.61] LOW-WAGE COMPENSATION SURTAX.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section, the terms in this section
have the meanings given them.
new text end

new text begin (b) "Employer" means a person doing business in Minnesota that:
new text end

new text begin (1) during any of the calendar years 2006, 2007, or 2008, employs more than 20
full-time equivalent employees in businesses operated in this state;
new text end

new text begin (2) during any of the calendar years 2009, 2010, or 2011, employs more than ten
full-time equivalent employees in businesses in this state; and
new text end

new text begin (3) during 2012 or a later calendar year, employs any number of individuals in
this state.
new text end

new text begin (c) "Living wage" means $14 per hour for calendar year 2006, adjusted for inflation
in subsequent years as provided in section 290.06, subdivision 2d, except that for the
purposes of this subdivision the percentage increase must be determined from the year
starting September 1, 2005, and ending August 31, 2006, as the base year for adjusting for
inflation for the calendar year beginning after December 31, 2006, and further adjusted
as follows:
new text end

new text begin (1) for employees whose primary work location in Minnesota is outside of the
metropolitan area defined in section 473.121, subdivision 2, the amount otherwise
determined under this subdivision is reduced by $2 per hour; and
new text end

new text begin (2) for employees who are provided a qualified health insurance benefit, the amount
otherwise determined under this subdivision is reduced by $3 per hour.
new text end

new text begin (d) "Qualified health insurance benefit" means a plan of health coverage that is at
least equivalent to a number two qualified plan as defined in section 62E.06.
new text end

new text begin Subd. 2. new text end

new text begin Imposition. new text end

new text begin A low-wage compensation surtax is imposed on employers
who pay their Minnesota employees wages that are less than a living wage as provided
in this section.
new text end

new text begin Subd. 3. new text end

new text begin Rate of tax. new text end

new text begin (a) For calendar years 2006 through 2011, the tax is one-third
of the amount by which the hourly wage paid to each employee of an employer who is
subject to the tax under this section is less than the living wage.
new text end

new text begin (b) For calendar years 2012 and thereafter, the tax is two-thirds of the amount by
which the hourly wage paid to each employee of an employer who is subject to the tax
under this section is less than the living wage.
new text end

new text begin Subd. 4. new text end

new text begin Startup businesses. new text end

new text begin (a) For the first three calendar years after a person
begins to do business in the state, the person, as defined under section 295.50, subdivision
9c, is exempt from the tax under this section. For the fourth through the sixth calendar
years, the tax that would otherwise be imposed under this section is reduced by two-thirds;
for the seventh through the ninth calendar years, the tax is reduced by one-third.
new text end

new text begin (b) The exemption under this subdivision terminates effective in the first calendar
year when the business begins to employ more than ten full-time equivalent employees in
the state.
new text end

new text begin Subd. 5. new text end

new text begin Use of revenues. new text end

new text begin The commissioner must deposit the proceeds of the tax
imposed under this section in the general fund. The amount of the tax shall be annually
determined by the commissioner and used to increase the Minnesota working family
credits provided under section 290.0671.
new text end

Sec. 5.

new text begin [295.62] RETURNS; PAYMENT; AUTHORITY OF DEPARTMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Return; payment of tax; audit. new text end

new text begin On or before January 31 of each
year, a return, in a form required by the department, with a remittance of the tax owed
under section 295.61 for wages paid during the preceding year, must be filed with the
department by each employer required to pay the tax. The filing and remittance may
be done electronically. For the purposes of reporting or paying the tax, the employer
and any agent of the employer are subject to the audit and enforcement provisions of
chapter 289A that apply to collections of the corporate franchise tax. Each return must be
authenticated by the person filing the return or by the person's agent who is authorized in
writing to file the return.
new text end

new text begin Subd. 2. new text end

new text begin Information. new text end

new text begin A person required to report and pay to the department a tax
under section 295.61 shall keep records, file statements, make returns, and comply with
the provisions of sections 295.61 to 295.63 and the rules adopted by the department. Each
return or statement must include the information required by the rules of the department.
new text end

Sec. 6.

new text begin [295.63] ADMINISTRATION; RULES.
new text end

new text begin The department shall:
new text end

new text begin (1) administer and enforce the provisions of sections 295.61 to 295.63 by applying
the provisions of chapter 289A that apply to administration of the corporate franchise tax
to taxpayers under sections 295.61 to 295.63;
new text end

new text begin (2) cause to be prepared and distributed forms and information that may be necessary
to administer the provisions of sections 295.61 to 295.63; and
new text end

new text begin (3) adopt rules that may be necessary or appropriate to administer and enforce the
provisions of sections 295.61 to 295.63.
new text end

Sec. 7. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 2 and 4 to 6 are effective for wages paid after December 31, 2005. Section
3 is effective for taxable years beginning after December 31, 2006. new text end