Sales Tax Proposals and the Impact on Nonprofits

House File 677 and Senate File 552 have recently been introduced reflecting Governor Dayton’s tax reform proposals. The Governor’s plan is designed to solve Minnesota’s budget deficit, raise increased revenues for the state’s priorities and reduce regressivity in Minnesota’s tax system. Within the proposal is the implementation of a new sales tax on services that would affect both the services that nonprofits purchase and the services that nonprofits provide to the community.

While the Minnesota Council of Nonprofits supports efforts to raise revenue to solve the budget deficit, and has long-held that reducing regressivity should be a priority, we do not believe that taxing nonprofits and the people they serve is the solution. We recognize that the resources nonprofit organizations count on for their mission-related services are raised through generous contributions by the community and through our role as an essential partner to government. Diverting these resources back to the state is counter-productive and reduces the sector’s ability to serve the community.

Learn more about the specifics in the Governor’s tax proposal >>

At 7:00 p.m. on Wednesday, February 27 the Minnesota House will hear public testimony on this topic. MCN’s public policy director Susie Brown will testify about the challenges these tax increases create for the nonprofit sector. If you are interested in testifying at this hearing, you can contact the House Tax Committee Administrator at 651-296-5528. Please be assured that MCN will be working on your behalf at the Capitol as these bills are heard and as other tax proposals are unveiled.

In the meantime, we anticipate federal sequestration on Friday, March 1. While we recognize the highly complex nature of the federal budget problems that must be solved, we sincerely hope that Congress is able to reach a balanced compromise that avoids this quickly approaching deadline. For more information on the anticipated Minnesota impact of sequestration, please see the analysis released by The White House.

It is MCN’s job to be vigilant on behalf of the nonprofit sector so that Minnesota remains a state where your organization can do its best work for the people who count on you. We are both your advocate and your resource. Please be in touch with policy director Susie Brown at or 651-757-3060 if you care to learn more or provide input on the issues before the Minnesota legislature.

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