1.1 	A bill for an act
1.2 	relating to taxation; modifying the provisions of the international economic 
1.3 	development zone; repealing the corporate franchise tax; amending Minnesota 
1.4 	Statutes 2006, sections 272.02, subdivision 83; 290.06, subdivision 2c, as 
1.5 	amended; 290.067, subdivision 1; 290.0671, subdivision 1; 290.091, subdivision 
1.6 	2, as amended; 297A.68, subdivision 41; 469.321, subdivision 6; 469.322; 
1.7 	469.324; 469.327, subdivisions 1, 2; 469.328, subdivision 1; 469.329; Minnesota 
1.8 	Statutes 2007 Supplement, section 290.01, subdivision 19b, as amended; 
1.9 	repealing Minnesota Statutes 2006, sections 289A.08, subdivision 3; 289A.26; 
1.10 	290.01, subdivisions 19c, 19d; 290.014, subdivision 5; 290.02; 290.06, 
1.11 	subdivision 1; 290.0921; 290.0922; 290.093; 290.21; 290.34; 290.36; 290.371; 
1.12 	290.432; 469.321, subdivisions 2, 3, 7, 8, 9; 469.3215; 469.323; 469.325; 
1.13 	469.326.
1.14 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.15 	Section 1. Minnesota Statutes 2006, section 272.02, subdivision 83, is amended to read:
1.16 		Subd. 83.International economic development zone property. (a) Improvements 
1.17 	to real property, and personal property, classified under section 273.13, subdivision 
1.18 	24, and located within the international economic development zone designated under 
1.19 	section 469.322, are exempt from ad valorem taxes levied under chapter 275, if the 
1.20 	improvements are:
1.21 	(1) used as part of ~~a regional distribution center~~ the scheduled airline operations of a 
1.22 	qualified business, as defined in section 469.321; or
1.23 	(2) occupied by a qualified business as defined in section 469.321~~, that uses the~~ 
1.24 	~~improvements primarily in freight forwarding operations~~.
1.25 	(b) The exemption applies to each assessment year that begins during the duration of 
1.26 	the international economic development zone. To be exempt under paragraph (a), clause 
1.27 	(2), the property must be occupied by July 1 of the assessment year by a qualified business 
2.1 	that has signed the ~~business subsidy~~ agreement by July 1 of the assessment year under 
2.2 	section 469.321, subdivision 6, clause (2).

2.3 	EFFECTIVE DATE. This section is effective for property taxes payable in 2010, 
2.4 	and thereafter.

2.5 	Sec. 2. Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, as 
2.6 	amended by Laws 2008, chapter 154, article 3, section 3, and Laws 2008, chapter 154, 
2.7 	article 11, section 11, is amended to read:
2.8 		Subd. 19b. Subtractions from federal taxable income. For individuals, estates, 
2.9 	and trusts, there shall be subtracted from federal taxable income:
2.10 	(1) net interest income on obligations of any authority, commission, or 
2.11 	instrumentality of the United States to the extent includable in taxable income for federal 
2.12 	income tax purposes but exempt from state income tax under the laws of the United States;
2.13 	(2) if included in federal taxable income, the amount of any overpayment of income 
2.14 	tax to Minnesota or to any other state, for any previous taxable year, whether the amount 
2.15 	is received as a refund or as a credit to another taxable year's income tax liability;
2.16 	(3) the amount paid to others, less the amount used to claim the credit allowed under 
2.17 	section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten 
2.18 	to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and 
2.19 	transportation of each qualifying child in attending an elementary or secondary school 
2.20 	situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a 
2.21 	resident of this state may legally fulfill the state's compulsory attendance laws, which 
2.22 	is not operated for profit, and which adheres to the provisions of the Civil Rights Act 
2.23 	of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or 
2.24 	tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause, 
2.25 	"textbooks" includes books and other instructional materials and equipment purchased 
2.26 	or leased for use in elementary and secondary schools in teaching only those subjects 
2.27 	legally and commonly taught in public elementary and secondary schools in this state. 
2.28 	Equipment expenses qualifying for deduction includes expenses as defined and limited in 
2.29 	section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional 
2.30 	books and materials used in the teaching of religious tenets, doctrines, or worship, the 
2.31 	purpose of which is to instill such tenets, doctrines, or worship, nor does it include books 
2.32 	or materials for, or transportation to, extracurricular activities including sporting events, 
2.33 	musical or dramatic events, speech activities, driver's education, or similar programs. For 
2.34 	purposes of the subtraction provided by this clause, "qualifying child" has the meaning 
2.35 	given in section 32(c)(3) of the Internal Revenue Code;
3.1 	(4) income as provided under section 290.0802;
3.2 	(5) to the extent included in federal adjusted gross income, income realized on 
3.3 	disposition of property exempt from tax under section 290.491;
3.4 	(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E) 
3.5 	of the Internal Revenue Code in determining federal taxable income by an individual 
3.6 	who does not itemize deductions for federal income tax purposes for the taxable year, an 
3.7 	amount equal to 50 percent of the excess of charitable contributions over $500 allowable 
3.8 	as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and 
3.9 	under the provisions of Public Law 109-1;
3.10 	(7) for taxable years beginning before January 1, 2008, the amount of the federal 
3.11 	small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code 
3.12 	which is included in gross income under section 87 of the Internal Revenue Code;
3.13 	(8) for individuals who are allowed a federal foreign tax credit for taxes that do not 
3.14 	qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover 
3.15 	of subnational foreign taxes for the taxable year, but not to exceed the total subnational 
3.16 	foreign taxes reported in claiming the foreign tax credit. For purposes of this clause, 
3.17 	"federal foreign tax credit" means the credit allowed under section 27 of the Internal 
3.18 	Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed 
3.19 	under section 904(c) of the Internal Revenue Code minus national level foreign taxes to 
3.20 	the extent they exceed the federal foreign tax credit;
3.21 	(9) in each of the five tax years immediately following the tax year in which an 
3.22 	addition is required under subdivision 19a, clause (7), or 19c, clause (14), in the case 
3.23 	of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth 
3.24 	of the delayed depreciation. For purposes of this clause, "delayed depreciation" means 
3.25 	the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or 
3.26 	subdivision 19c, clause (14), in the case of a shareholder of an S corporation, minus the 
3.27 	positive value of any net operating loss under section 172 of the Internal Revenue Code 
3.28 	generated for the tax year of the addition. The resulting delayed depreciation cannot be 
3.29 	less than zero;
3.30 	(10) job opportunity building zone income as provided under section 469.316;
3.31 	(11) to the extent included in federal taxable income, the amount of compensation 
3.32 	paid to members of the Minnesota National Guard or other reserve components of the 
3.33 	United States military for active service performed in Minnesota, excluding compensation 
3.34 	for services performed under the Active Guard Reserve (AGR) program. For purposes of 
3.35 	this clause, "active service" means (i) state active service as defined in section 190.05, 
3.36 	subdivision 5a, clause (1); (ii) federally funded state active service as defined in section 
4.1 	190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05, 
4.2 	subdivision 5c, but "active service" excludes services performed exclusively for purposes 
4.3 	of basic combat training, advanced individual training, annual training, and periodic 
4.4 	inactive duty training; special training periodically made available to reserve members; 
4.5 	and service performed in accordance with section 190.08, subdivision 3;
4.6 	(12) to the extent included in federal taxable income, the amount of compensation 
4.7 	paid to Minnesota residents who are members of the armed forces of the United States or 
4.8 	United Nations for active duty performed outside Minnesota under United States Code, 
4.9 	title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of 
4.10 	the United Nations;
4.11 	(13) an amount, not to exceed $10,000, equal to qualified expenses related to a 
4.12 	qualified donor's donation, while living, of one or more of the qualified donor's organs 
4.13 	to another person for human organ transplantation. For purposes of this clause, "organ" 
4.14 	means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow; 
4.15 	"human organ transplantation" means the medical procedure by which transfer of a human 
4.16 	organ is made from the body of one person to the body of another person; "qualified 
4.17 	expenses" means unreimbursed expenses for both the individual and the qualified donor 
4.18 	for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses 
4.19 	may be subtracted under this clause only once; and "qualified donor" means the individual 
4.20 	or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An 
4.21 	individual may claim the subtraction in this clause for each instance of organ donation for 
4.22 	transplantation during the taxable year in which the qualified expenses occur;
4.23 	(14) in each of the five tax years immediately following the tax year in which an 
4.24 	addition is required under subdivision 19a, clause (8), or 19c, clause (15), in the case of 
4.25 	a shareholder of a corporation that is an S corporation, an amount equal to one-fifth of 
4.26 	the addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (15), 
4.27 	in the case of a shareholder of a corporation that is an S corporation, minus the positive 
4.28 	value of any net operating loss under section 172 of the Internal Revenue Code generated 
4.29 	for the tax year of the addition. If the net operating loss exceeds the addition for the tax 
4.30 	year, a subtraction is not allowed under this clause; and
4.31 	(15) to the extent included in federal taxable income, compensation paid to a 
4.32 	nonresident who is a service member as defined in United States Code, title 10, section 
4.33 	101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public 
4.34 	Law 108-189, section 101(2)~~; and~~
4.35 	~~(16) international economic development zone income as provided under section~~ 
4.36 	~~469.325~~.

5.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
5.2 	December 31, 2009.

5.3 	Sec. 3. Minnesota Statutes 2006, section 290.06, subdivision 2c, as amended by Laws 
5.4 	2008, chapter 154, article 4, section 6, is amended to read:
5.5 		Subd. 2c. Schedules of rates for individuals, estates, and trusts. (a) The income 
5.6 	taxes imposed by this chapter upon married individuals filing joint returns and surviving 
5.7 	spouses as defined in section 2(a) of the Internal Revenue Code must be computed by 
5.8 	applying to their taxable net income the following schedule of rates: 
5.9 	(1) On the first $25,680, 5.35 percent; 
5.10 	(2) On all over $25,680, but not over $102,030, 7.05 percent; 
5.11 	(3) On all over $102,030, 7.85 percent. 
5.12 	Married individuals filing separate returns, estates, and trusts must compute their 
5.13 	income tax by applying the above rates to their taxable income, except that the income 
5.14 	brackets will be one-half of the above amounts. 
5.15 	(b) The income taxes imposed by this chapter upon unmarried individuals must be 
5.16 	computed by applying to taxable net income the following schedule of rates: 
5.17 	(1) On the first $17,570, 5.35 percent; 
5.18 	(2) On all over $17,570, but not over $57,710, 7.05 percent; 
5.19 	(3) On all over $57,710, 7.85 percent. 
5.20 	(c) The income taxes imposed by this chapter upon unmarried individuals qualifying 
5.21 	as a head of household as defined in section 2(b) of the Internal Revenue Code must be 
5.22 	computed by applying to taxable net income the following schedule of rates: 
5.23 	(1) On the first $21,630, 5.35 percent; 
5.24 	(2) On all over $21,630, but not over $86,910, 7.05 percent; 
5.25 	(3) On all over $86,910, 7.85 percent. 
5.26 	(d) In lieu of a tax computed according to the rates set forth in this subdivision, the 
5.27 	tax of any individual taxpayer whose taxable net income for the taxable year is less than 
5.28 	an amount determined by the commissioner must be computed in accordance with tables 
5.29 	prepared and issued by the commissioner of revenue based on income brackets of not 
5.30 	more than $100. The amount of tax for each bracket shall be computed at the rates set 
5.31 	forth in this subdivision, provided that the commissioner may disregard a fractional part of 
5.32 	a dollar unless it amounts to 50 cents or more, in which case it may be increased to $1. 
5.33 	(e) An individual who is not a Minnesota resident for the entire year must compute 
5.34 	the individual's Minnesota income tax as provided in this subdivision. After the 
6.1 	application of the nonrefundable credits provided in this chapter, the tax liability must 
6.2 	then be multiplied by a fraction in which: 
6.3 	(1) the numerator is the individual's Minnesota source federal adjusted gross income 
6.4 	as defined in section 62 of the Internal Revenue Code and increased by the additions 
6.5 	required under section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (11), and 
6.6 	(12) and reduced by the Minnesota assignable portion of the subtraction for United States 
6.7 	government interest under section 290.01, subdivision 19b, clause (1), and the subtractions 
6.8 	under section 290.01, subdivision 19b, clauses (9), (10), (14), (15), and (16), after applying 
6.9 	the allocation and assignability provisions of section 290.081, clause (a), or 290.17; and 
6.10 	(2) the denominator is the individual's federal adjusted gross income as defined in 
6.11 	section 62 of the Internal Revenue Code of 1986, increased by the amounts specified in 
6.12 	section 290.01, subdivision 19a, clauses (1), (5), (6), (7), (8), (9), (11), and (12) and 
6.13 	reduced by the amounts specified in section 290.01, subdivision 19b, clauses (1), (9), (10), 
6.14 	(14), and (15)~~, and (16)~~. 

6.15 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
6.16 	December 31, 2009.

6.17 	Sec. 4. Minnesota Statutes 2006, section 290.067, subdivision 1, is amended to read:
6.18 		Subdivision 1.Amount of credit. (a) A taxpayer may take as a credit against the 
6.19 	tax due from the taxpayer and a spouse, if any, under this chapter an amount equal to the 
6.20 	dependent care credit for which the taxpayer is eligible pursuant to the provisions of 
6.21 	section 21 of the Internal Revenue Code subject to the limitations provided in subdivision 
6.22 	2 except that in determining whether the child qualified as a dependent, income received 
6.23 	as a Minnesota family investment program grant or allowance to or on behalf of the child 
6.24 	must not be taken into account in determining whether the child received more than half 
6.25 	of the child's support from the taxpayer, and the provisions of section 32(b)(1)(D) of 
6.26 	the Internal Revenue Code do not apply.
6.27 	(b) If a child who has not attained the age of six years at the close of the taxable year 
6.28 	is cared for at a licensed family day care home operated by the child's parent, the taxpayer 
6.29 	is deemed to have paid employment-related expenses. If the child is 16 months old or 
6.30 	younger at the close of the taxable year, the amount of expenses deemed to have been paid 
6.31 	equals the maximum limit for one qualified individual under section 21(c) and (d) of the 
6.32 	Internal Revenue Code. If the child is older than 16 months of age but has not attained the 
6.33 	age of six years at the close of the taxable year, the amount of expenses deemed to have 
6.34 	been paid equals the amount the licensee would charge for the care of a child of the same 
6.35 	age for the same number of hours of care.
7.1 	(c) If a married couple:
7.2 	(1) has a child who has not attained the age of one year at the close of the taxable 
7.3 	year;
7.4 	(2) files a joint tax return for the taxable year; and
7.5 	(3) does not participate in a dependent care assistance program as defined in section 
7.6 	129 of the Internal Revenue Code, in lieu of the actual employment related expenses paid 
7.7 	for that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of 
7.8 	(i) the combined earned income of the couple or (ii) the amount of the maximum limit for 
7.9 	one qualified individual under section 21(c) and (d) of the Internal Revenue Code will 
7.10 	be deemed to be the employment related expense paid for that child. The earned income 
7.11 	limitation of section 21(d) of the Internal Revenue Code shall not apply to this deemed 
7.12 	amount. These deemed amounts apply regardless of whether any employment-related 
7.13 	expenses have been paid.
7.14 	(d) If the taxpayer is not required and does not file a federal individual income tax 
7.15 	return for the tax year, no credit is allowed for any amount paid to any person unless:
7.16 	(1) the name, address, and taxpayer identification number of the person are included 
7.17 	on the return claiming the credit; or
7.18 	(2) if the person is an organization described in section 501(c)(3) of the Internal 
7.19 	Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, 
7.20 	the name and address of the person are included on the return claiming the credit.
7.21 	In the case of a failure to provide the information required under the preceding sentence, 
7.22 	the preceding sentence does not apply if it is shown that the taxpayer exercised due 
7.23 	diligence in attempting to provide the information required.
7.24 	In the case of a nonresident, part-year resident, or a person who has earned income 
7.25 	not subject to tax under this chapter including earned income excluded pursuant to section 
7.26 	290.01, subdivision 19b, clause (10) ~~or (16)~~, the credit determined under section 21 of the 
7.27 	Internal Revenue Code must be allocated based on the ratio by which the earned income 
7.28 	of the claimant and the claimant's spouse from Minnesota sources bears to the total earned 
7.29 	income of the claimant and the claimant's spouse.
7.30 	For residents of Minnesota, the subtractions for military pay under section 290.01, 
7.31 	subdivision 19b, clauses (11) and (12), are not considered "earned income not subject to 
7.32 	tax under this chapter."
7.33 	For residents of Minnesota, the exclusion of combat pay under section 112 of the 
7.34 	Internal Revenue Code is not considered "earned income not subject to tax under this 
7.35 	chapter."

8.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
8.2 	December 31, 2009.

8.3 	Sec. 5. Minnesota Statutes 2006, section 290.0671, subdivision 1, is amended to read:
8.4 		Subdivision 1.Credit allowed. (a) An individual is allowed a credit against the tax 
8.5 	imposed by this chapter equal to a percentage of earned income. To receive a credit, a 
8.6 	taxpayer must be eligible for a credit under section 32 of the Internal Revenue Code.
8.7 	(b) For individuals with no qualifying children, the credit equals 1.9125 percent of 
8.8 	the first $4,620 of earned income. The credit is reduced by 1.9125 percent of earned 
8.9 	income or adjusted gross income, whichever is greater, in excess of $5,770, but in no 
8.10 	case is the credit less than zero.
8.11 	(c) For individuals with one qualifying child, the credit equals 8.5 percent of the first 
8.12 	$6,920 of earned income and 8.5 percent of earned income over $12,080 but less than 
8.13 	$13,450. The credit is reduced by 5.73 percent of earned income or adjusted gross income, 
8.14 	whichever is greater, in excess of $15,080, but in no case is the credit less than zero.
8.15 	(d) For individuals with two or more qualifying children, the credit equals ten 
8.16 	percent of the first $9,720 of earned income and 20 percent of earned income over 
8.17 	$14,860 but less than $16,800. The credit is reduced by 10.3 percent of earned income 
8.18 	or adjusted gross income, whichever is greater, in excess of $17,890, but in no case is 
8.19 	the credit less than zero.
8.20 	(e) For a nonresident or part-year resident, the credit must be allocated based on the 
8.21 	percentage calculated under section 290.06, subdivision 2c, paragraph (e).
8.22 	(f) For a person who was a resident for the entire tax year and has earned income 
8.23 	not subject to tax under this chapter, including income excluded under section 290.01, 
8.24 	subdivision 19b, clause (10) ~~or (16)~~, the credit must be allocated based on the ratio of 
8.25 	federal adjusted gross income reduced by the earned income not subject to tax under 
8.26 	this chapter over federal adjusted gross income. For purposes of this paragraph, the 
8.27 	subtractions for military pay under section 290.01, subdivision 19b, clauses (11) and (12), 
8.28 	are not considered "earned income not subject to tax under this chapter."
8.29 	For the purposes of this paragraph, the exclusion of combat pay under section 112 
8.30 	of the Internal Revenue Code is not considered "earned income not subject to tax under 
8.31 	this chapter."
8.32 	(g) For tax years beginning after December 31, 2001, and before December 31, 
8.33 	2004, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
8.34 	paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 
8.35 	$1,000 for married taxpayers filing joint returns.
9.1 	(h) For tax years beginning after December 31, 2004, and before December 31, 
9.2 	2007, the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in 
9.3 	paragraph (d), after being adjusted for inflation under subdivision 7, are each increased by 
9.4 	$2,000 for married taxpayers filing joint returns.
9.5 	(i) For tax years beginning after December 31, 2007, and before December 31, 2010, 
9.6 	the $5,770 in paragraph (b), the $15,080 in paragraph (c), and the $17,890 in paragraph 
9.7 	(d), after being adjusted for inflation under subdivision 7, are each increased by $3,000 for 
9.8 	married taxpayers filing joint returns. For tax years beginning after December 31, 2008, 
9.9 	the $3,000 is adjusted annually for inflation under subdivision 7.
9.10 	(j) The commissioner shall construct tables showing the amount of the credit at 
9.11 	various income levels and make them available to taxpayers. The tables shall follow 
9.12 	the schedule contained in this subdivision, except that the commissioner may graduate 
9.13 	the transition between income brackets.

9.14 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
9.15 	December 31, 2009.

9.16 	Sec. 6. Minnesota Statutes 2006, section 290.091, subdivision 2, as amended by Laws 
9.17 	2008, chapter 154, article 4, section 7, is amended to read:
9.18 		Subd. 2. Definitions. For purposes of the tax imposed by this section, the following 
9.19 	terms have the meanings given: 
9.20 	(a) "Alternative minimum taxable income" means the sum of the following for 
9.21 	the taxable year: 
9.22 	(1) the taxpayer's federal alternative minimum taxable income as defined in section 
9.23 	55(b)(2) of the Internal Revenue Code; 
9.24 	(2) the taxpayer's itemized deductions allowed in computing federal alternative 
9.25 	minimum taxable income, but excluding: 
9.26 	(i) the charitable contribution deduction under section 170 of the Internal Revenue 
9.27 	Code: 
9.28 	(A) for taxable years beginning before January 1, 2006, to the extent that the 
9.29 	deduction exceeds 1.0 percent of adjusted gross income; 
9.30 	(B) for taxable years beginning after December 31, 2005, to the full extent of the 
9.31 	deduction. 
9.32 	For purposes of this clause, "adjusted gross income" has the meaning given in 
9.33 	section 62 of the Internal Revenue Code; 
9.34 	(ii) the medical expense deduction; 
9.35 	(iii) the casualty, theft, and disaster loss deduction; and 
10.1 	(iv) the impairment-related work expenses of a disabled person; 
10.2 	(3) for depletion allowances computed under section 613A(c) of the Internal 
10.3 	Revenue Code, with respect to each property (as defined in section 614 of the Internal 
10.4 	Revenue Code), to the extent not included in federal alternative minimum taxable income, 
10.5 	the excess of the deduction for depletion allowable under section 611 of the Internal 
10.6 	Revenue Code for the taxable year over the adjusted basis of the property at the end of the 
10.7 	taxable year (determined without regard to the depletion deduction for the taxable year); 
10.8 	(4) to the extent not included in federal alternative minimum taxable income, the 
10.9 	amount of the tax preference for intangible drilling cost under section 57(a)(2) of the 
10.10 	Internal Revenue Code determined without regard to subparagraph (E); 
10.11 	(5) to the extent not included in federal alternative minimum taxable income, the 
10.12 	amount of interest income as provided by section 290.01, subdivision 19a, clause (1); and 
10.13 	(6) the amount of addition required by section 290.01, subdivision 19a, clauses 
10.14 	(7) to (9), (11), and (12); 
10.15 	less the sum of the amounts determined under the following: 
10.16 	(1) interest income as defined in section 290.01, subdivision 19b, clause (1); 
10.17 	(2) an overpayment of state income tax as provided by section 290.01, subdivision 
10.18 	19b, clause (2), to the extent included in federal alternative minimum taxable income; 
10.19 	(3) the amount of investment interest paid or accrued within the taxable year on 
10.20 	indebtedness to the extent that the amount does not exceed net investment income, as 
10.21 	defined in section 163(d)(4) of the Internal Revenue Code. Interest does not include 
10.22 	amounts deducted in computing federal adjusted gross income; and 
10.23 	(4) amounts subtracted from federal taxable income as provided by section 290.01, 
10.24 	subdivision 19b, clauses (9) to ~~(16)~~ (15). 
10.25 	In the case of an estate or trust, alternative minimum taxable income must be 
10.26 	computed as provided in section 59(c) of the Internal Revenue Code. 
10.27 	(b) "Investment interest" means investment interest as defined in section 163(d)(3) 
10.28 	of the Internal Revenue Code. 
10.29 	(c) "Tentative minimum tax" equals 6.4 percent of alternative minimum taxable 
10.30 	income after subtracting the exemption amount determined under subdivision 3. 
10.31 	(d) "Regular tax" means the tax that would be imposed under this chapter (without 
10.32 	regard to this section and section 290.032), reduced by the sum of the nonrefundable 
10.33 	credits allowed under this chapter. 
10.34 	(e) "Net minimum tax" means the minimum tax imposed by this section. 

 10.35 	

11.1 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
11.2 	December 31, 2009.

11.3 	Sec. 7. Minnesota Statutes 2006, section 297A.68, subdivision 41, is amended to read:
11.4 		Subd. 41.International economic development zones. (a) Purchases of tangible 
11.5 	personal property or taxable services by a qualified business, as defined in section 469.321, 
11.6 	are exempt if the property or services are primarily used or consumed in the international 
11.7 	economic development zone designated under section 469.322. This exemption applies 
11.8 	only if the purchase is made and delivery received after the business signed the ~~business~~ 
11.9 	~~subsidy~~ agreement required under chapter 469.
11.10 	(b) Purchase and use of construction materials, supplies, and equipment incorporated 
11.11 	into the construction of improvements to real property in the international economic 
11.12 	development zone are exempt if the improvements after completion of construction are to 
11.13 	be ~~used as a regional distribution center as defined in section 469.321 or otherwise~~ used in 
11.14 	the conduct of ~~freight forwarding~~ scheduled airline operations and related activities of a 
11.15 	qualified business as defined in section 469.321. This exemption applies regardless of 
11.16 	whether the purchases are made by the business or a contractor.
11.17 	(c) The exemptions under this subdivision apply to a local sales and use tax, 
11.18 	regardless of whether the local tax is imposed on sales taxable under this chapter or in 
11.19 	another law, ordinance, or charter provision.
11.20 	(d) The exemptions in this section apply to sales and purchases made after ~~the date~~ 
11.21 	~~of final zone designation under section 469.322, paragraph (c),~~ June 30, 2009, and before 
11.22 	the expiration of the zone under section 469.322, paragraph (d).
11.23 	~~(e) For purchases made for improvements to real property to be occupied by a~~ 
11.24 	~~business that has not signed a business subsidy agreement at the time of the purchase, the~~ 
11.25 	~~tax must be imposed and collected as if the rate under section 297A.62, subdivision 1,~~ 
11.26 	~~applied, and then refunded in the manner provided in section 297A.75. The taxpayer~~ 
11.27 	~~must attach to the claim for refund information sufficient for the commissioner to be able~~ 
11.28 	~~to determine that the improvements are being occupied by a business that has signed a~~ 
11.29 	~~business subsidy agreement.~~

11.30 	EFFECTIVE DATE. This section is effective for sales made after June 30, 2009.

11.31 	Sec. 8. Minnesota Statutes 2006, section 469.321, subdivision 6, is amended to read:
11.32 		Subd. 6.Qualified business. "Qualified business" means a person ~~who has signed a~~ 
11.33 	~~business subsidy agreement as required under sections 116J.993 to 116J.995 and 469.323,~~ 
11.34 	~~subdivision 4,~~ carrying on a trade or business ~~at a place of business located within the~~ 
12.1 	~~international economic development zone that is~~ consisting of scheduled airline operations 
12.2 	that employ at least 70,000 employees, that acquires a scheduled airline headquartered in 
12.3 	the state of Minnesota, and that:
12.4 	(1)~~(i) engaged in the furtherance of international export or import of goods as a~~ 
12.5 	~~freight forwarder; and (ii) certified by the foreign trade zone authority as a trade or business~~ 
12.6 	~~that furthers the purpose of developing international distribution capacity and capability;~~ 
12.7 	~~or~~ relocates its headquarters from another state to a location in the state of Minnesota; and
12.8 	(2) ~~the owner or operator of a regional distribution center~~ enters an agreement with 
12.9 	the commissioner of the Department of Employment and Economic Development to 
12.10 	maintain its headquarters in Minnesota for at least 12 years.

12.11 	EFFECTIVE DATE. This section is effective the day following final enactment.

12.12 	Sec. 9. Minnesota Statutes 2006, section 469.322, is amended to read:
12.13 	469.322 DESIGNATION OF INTERNATIONAL ECONOMIC 
12.14 	DEVELOPMENT ZONE.
12.15 	(a) An area ~~designated as a foreign trade zone may be designated by the foreign~~ 
12.16 	~~trade zone authority as an international economic development zone if within the zone~~ 
12.17 	~~a regional distribution center is being developed pursuant to section 469.323. The zone~~ 
12.18 	~~must consist of contiguous area of not less than 500 acres and not more than 1,000~~ 
12.19 	~~acres.~~consisting of the headquarters and related facilities of a qualified business and the 
12.20 	property, owned or leased and occupied by a qualified business at the Minneapolis-St. 
12.21 	Paul International Airport, is designated as an international economic development zone. 
12.22 	The designation authority under this section is limited to ~~one~~that zone.
12.23 	(b) ~~In making the designation, the foreign trade zone authority, in consultation with~~ 
12.24 	~~the Minnesota Department of Transportation and the Metropolitan Council, shall consider~~ 
12.25 	~~access to major transportation routes, consistency with current state transportation and~~ 
12.26 	~~air cargo planning, adequacy of the size of the site, access to airport facilities, present~~ 
12.27 	~~and future capacity at the designated airport, the capability to meet integrated present~~ 
12.28 	~~and future air cargo, security, and inspection services, and access to other infrastructure~~ 
12.29 	~~and financial incentives. The border of the international economic development zone~~ 
12.30 	~~must be no more than 60 miles distant or 90 minutes drive time from the border of the~~ 
12.31 	~~Minneapolis-St. Paul International Airport.~~
12.32 	~~(c) Before final designation of the zone, the foreign trade zone authority, in~~ 
12.33 	~~consultation with the applicant, must conduct a transportation impact study based on the~~ 
12.34 	~~regional model and utilizing traffic forecasting and assignments. The results must be used~~ 
13.1 	~~to evaluate the effects of the proposed use on the transportation system and identify any~~ 
13.2 	~~needed improvements. If the site is in the metropolitan area the study must also evaluate~~ 
13.3 	~~the effect of the transportation impacts on the Metropolitan Transportation System plan~~ 
13.4 	~~as well as the comprehensive plans of the municipalities that would be affected. The~~ 
13.5 	~~authority shall provide copies of the study to the legislature under section 3.195 and to the~~ 
13.6 	~~chairs of the committees with jurisdiction over transportation and economic development.~~ 
13.7 	~~The applicant must pay the cost of the study.~~
13.8 	~~(d) Final zone designation must be made by June 30, 2008.~~
13.9 	~~(e)~~ Duration of the zone is a 12-year period beginning on January 1, 2010.

13.10 	EFFECTIVE DATE. This section is effective June 30, 2008.

13.11 	Sec. 10. Minnesota Statutes 2006, section 469.324, is amended to read:
13.12 	469.324 TAX INCENTIVES IN INTERNATIONAL ECONOMIC 
13.13 	DEVELOPMENT ZONE.
13.14 	Qualified businesses that operate in an international economic development zone, 
13.15 	individuals who invest in a regional distribution center or qualified businesses that operate 
13.16 	in an international economic development zone, and property located in an international 
13.17 	economic development zone qualify for:
13.18 	(1) ~~exemption from individual income taxes as provided under section 469.325;~~
13.19 	~~(2) exemption from corporate franchise taxes as provided under section 469.326;~~
13.20 	~~(3)~~ exemption from the state sales and use tax and any local sales and use taxes on 
13.21 	qualifying purchases as provided in section 297A.68, subdivision 41;
13.22 	~~(4)~~ (2) exemption from the property tax as provided in section 272.02, subdivision 
13.23 	68; and
13.24 	~~(5)~~ (3) the jobs credit allowed under section 469.327.

13.25 	EFFECTIVE DATE. This section is effective June 30, 2008.

13.26 	Sec. 11. Minnesota Statutes 2006, section 469.327, subdivision 1, is amended to read:
13.27 		Subdivision 1.Credit allowed. (a) A qualified business is allowed a credit against 
13.28 	the taxes imposed under chapter 290. The credit equals ~~seven~~ one percent of the:
13.29 	(1) lesser of~~:~~
13.30 	~~(i) zone payroll for the taxable year, less the zone payroll for the base year; or~~
13.31 	~~(ii)~~ total Minnesota payroll for the taxable year, less total Minnesota payroll for 
13.32 	the base year; minus
14.1 	(2) $30,000 multiplied by the number of full-time equivalent employees that the 
14.2 	qualified business employs in ~~the international economic development zone~~ Minnesota
14.3 	for the taxable year, minus the number of full-time equivalent employees the business 
14.4 	employed in ~~the zone~~ Minnesota in the base year, but not less than zero.
14.5 	(b) This section applies only to tax years beginning during the duration of the 
14.6 	international economic development zone.

14.7 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
14.8 	December 31, 2009.

14.9 	Sec. 12. Minnesota Statutes 2006, section 469.327, subdivision 2, is amended to read:
14.10 		Subd. 2.Definitions. (a) For purposes of this section, the following terms have 
14.11 	the meanings given.
14.12 	(b) "Base year" means the taxable year beginning during the calendar year 
14.13 	immediately preceding the calendar year in which the duration of the zone begins under 
14.14 	section 469.322, paragraph ~~(d)~~ (b).
14.15 	(c) "Full-time equivalent employees" means the equivalent of annualized expected 
14.16 	hours of work equal to 2,080 hours.
14.17 	(d) "Minnesota payroll" means the wages or salaries attributed to Minnesota under 
14.18 	section 290.191, subdivision 12, for the qualified business or the unitary business of which 
14.19 	the qualified business is a part, whichever is greater.
14.20 	(e) "~~Zone~~ Payroll" means wages or salaries used to determine the zone payroll 
14.21 	factor for the qualified business, less the amount of compensation attributable to any 
14.22 	employee that exceeds $70,000.

14.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
14.24 	December 31, 2009.

14.25 	Sec. 13. Minnesota Statutes 2006, section 469.328, subdivision 1, is amended to read:
14.26 		Subdivision 1.Repayment obligation. A person must repay the amount of the tax 
14.27 	reduction received under section 469.324, subdivision 1, clauses (1) to (5), or credit 
14.28 	received under section 469.327, during the two years immediately before it ceased to 
14.29 	operate in the zone as a qualified business, if the person ceased to operate its facility 
14.30 	located within the zone, ceased to be in compliance with the terms of the ~~business subsidy~~
14.31 	agreement under section 469.321, subdivision 6, or otherwise ceases to be or is not a 
14.32 	qualified business.

14.33 	EFFECTIVE DATE. This section is effective June 30, 2008.

15.1 	Sec. 14. Minnesota Statutes 2006, section 469.329, is amended to read:
15.2 	469.329 REPORTING REQUIREMENTS.
15.3 	~~(a) An applicant receiving designation of an international economic development~~ 
15.4 	~~zone under section 469.322 must annually report to the commissioner of employment and~~ 
15.5 	~~economic development on its progress in meeting the zone performance goals under~~ 
15.6 	~~the business plan for the zone and the applicant's compliance with the business subsidy~~ 
15.7 	~~law under sections 116J.993 to 116J.995.~~
15.8 	~~(b)~~ The commissioner must report on its Web site information on (1) the estimated 
15.9 	amount of the tax expenditures for the zone, (2) the business subsidy agreements with 
15.10 	qualified businesses in the zone, (3) the estimated number of new jobs created in the 
15.11 	zone and investment made, and (4) other information similar to the information that the 
15.12 	commissioner reports on the job opportunity building zone program on the department's 
15.13 	Web site.

15.14 	EFFECTIVE DATE. This section is effective June 30, 2008.

15.15 	Sec. 15. AIRPORT GOVERNANCE STUDY COMMISSION.
 15.16 	(a) An airport study commission is established to examine the governance structure 
15.17 	of the Metropolitan Airports Commission and the operations of the Minneapolis-St. 
15.18 	Paul International Airport. The purpose of the study is to determine ways in which the 
15.19 	governance and operations of the airport could be improved to be more efficient and 
15.20 	cost-effective with a primary goal of permitting the airport to be operated as a residual 
15.21 	airport that is more attractive as a base for major airline operations.
15.22 	(b) The commission consists of 12 members as follows:
15.23 	(1) six members of the public, particularly individuals with knowledge of and 
15.24 	experience in the aviation industry, appointed by the governor;
15.25 	(2) three members of the senate, consisting of two members of the majority caucus 
15.26 	and one member of the minority caucus, appointed by the senate Subcommittee on 
15.27 	Committees of the Committee on Rules and Administration; and
15.28 	(3) three members of the house of representatives, two appointed by the speaker 
15.29 	and one appointed by the minority leader.
15.30 	(c) The commission shall file a written report with the legislature on or before 
15.31 	January 4, 2010, in the manner provided under Minnesota Statutes, section 3.195.

15.32 	EFFECTIVE DATE. This section is effective the day following final enactment.

15.33 	Sec. 16. REVISOR'S INSTRUCTION.
 16.1 	The revisor of statutes shall prepare a bill for introduction in the 2009 legislature 
16.2 	implementing and conforming to the repeal of the corporate franchise in section 17 by 
16.3 	eliminating the references to the tax and its provisions in Minnesota Statutes.

16.4 	Sec. 17.  REPEALER.
 16.5 	(a) Minnesota Statutes 2006, sections 289A.08, subdivision 3; 289A.26; 290.01, 
16.6 	subdivisions 19c and 19d; 290.014, subdivision 5; 290.02; 290.06, subdivision 1; 
16.7 	290.0921; 290.0922; 290.093; 290.21; 290.34; 290.36; 290.371; and 290.432, are repealed.
16.8 	(b) Minnesota Statutes 2006, sections 469.321, subdivisions 2, 3, 7, 8, and 9; 
16.9 	469.3215; 469.323; 469.325; and 469.326, are repealed.

16.10 	EFFECTIVE DATE. Paragraph (a) of this section is effective for taxable years 
16.11 	beginning after December 31, 2009. Paragraph (b) is effective June 30, 2009.