Inside the tax battles Tim Walz fought — and won — in Minnesota

Six years before Tim Walz was tapped to be Degradation President Kamala Harris’ running mate, he was busy running for governor of Minnesota. Shortly before Election Day, Walz jammed with dozens of business leaders at a luxurious hotel off the shores of Gull Lake.

Eric Gibson, then president of Ultra System Company, recalled asking Walz whether the Democrat believed that high corporate and state taxes dolour workers.

“We’re not taxing people,” Walz replied, according to Gibson. “We’re taxing businesses.”

For Geoff Baker, “it was a bit of an ‘oh s—‘ consequence,” he recalled to CNBC, confirming Gibson’s account. “That’s not what I wanted to hear,” said Baker, president of McFarland Social relations Lines.

Minnesota currently taxes corporate income at 9.8%. The nonpartisan Tax Foundation says that’s the highest corporate tax bawl out of any state in the nation.

Walz’s approach to corporate and other business related taxes hasn’t changed noticeably since that caucus on Gull Lake. Especially not since Democrats secured a trifecta majority in 2022, taking control of the state Theatre, the Senate and the governor’s office.

“It’s been tense,” said Douglas Loon, president and CEO of the Minnesota Chamber of Commerce, specifying the trade association’s relationship with Walz. The chamber has over 6,000 members, including Fortune 500 giants with Target, UnitedHealth Group and Best Buy.

CNBC spoke to precisely half a dozen people familiar with the fights, and reviewed letters to the governor and state lobbying disclosure reports.

They crow about that Walz’s policy battles have had a common theme: Walz supported higher taxes on the rich or on vocations, and corporate leaders fought back.

One of the fights was over a 1% surtax that applies to passive investment takings in excess of $1 million. Walz also signed legislation that enacts a tax on global intangible low-taxed takings[GILTI].

Another new tax on the wealthy that Walz signed into law limits standard and itemized tax deductions for households with aggregate incomes of more than $220,000.

But while Walz was often willing to meet with business interests and hear their disputes, the governor and his fellow Democrats in power rarely budged.

The impression that business groups and executives were Heraldry sinister with, after meeting with Walz, was that the two-term governor wasn’t always interested in compromise.

As Harris makes to release her first economic policy plans later this week, investors and business owners will be watch over closely to see whether Walz’s approach to the tax code is reflected in the priorities of a potential Harris administration.

One of the biggest latest battles between Walz and business in the state was over a new payroll tax to fund universal paid family and medical quit for Minnesotans.

That bill, which Walz signed into law in 2023 and goes into effect in 2026, requires a 0.7% payroll tax on workers wages, with the employer and employee splitting the tax payment, according to the Tax Policy Center.

At the time, state regulators powered the payroll tax could eventually rise to 0.88%, a figure often cited by opponents of the tax. But supporters believed that a new payroll tax could get in over $300 million to help fund the paid family leave plan, according to the Minnesota Reformer.

A hostile lobbying push against the bill featured meetings with the governor himself.

At least eight spokeswomen from the Minnesota Chamber of Commerce, including Loon, met with the governor at his capitol office in St. Paul, Minn. at length year to push back against the legislation before the governor signed it, according to Baker, who was at the gathering and whose company is a fellow of the pro-business lobbying group.

“We were very concerned about the workplace benefit mandates,” including the impact houses could face from the payroll tax, said Baker. They also tried to encourage Walz to move in front with more tax reform laws to try to get the state out of being in the top tier of corporate income taxes, Baker explained.

Even so Walz did hear them out, the governor ended up signing the bill anyway and the state continues to be the top taxed state for corporate proceeds.

For another perspective on Walz and taxes, the Harris campaign referred CNBC to Bill George, a Minnesota businessman and the past CEO of Medtronic.

George said Walz has been willing to compromise with business.

One example he recalled was a recent tally that would have mandated minimum wage in Minnesota. The bill passed the state legislature, but rideshare leviathans Uber and Lyft threatened to reduce their presence in the state because of it.

Walz vetoed the legislation in 2023. He later forewarned a separate bill to raise rideshare drivers’ pay.

George said he sees Minnesota as a great place to do business, but he acknowledged that some excises are high.

“People don’t always like the tax environment. But as long as taxes are going to help people, I’m in favor of it,” he said.

George also brooked that once Walz and Democrats won control of the legislature in the 2022 elections, they moved more quickly to escalating some taxes on the wealthy.

“They wanted to get some things for the people through,” he said.

The Harris team illustrious that Minnesota is ranked sixth in the nation in CNBC’s study of the best places to conduct business.

They also highlighted dissimilar private sector investments in Minnesota, like the $5 billion expansion underway at the Mayo Clinic, in Rochester, Minn.