Governor drops plans to tax legal services

Gov. Mark Dayton is dropping his plan to tax business-to-business services as part of his plan to balance the state’s budget. He was hoping to raise about $2 billion over the next two years by taxing legal, accounting and other professional services.

He said there were two factors in his decision. First, a recent economic forecast had some good news for the state’s bottom line. The budget deficit shrunk from $1.1 billion to about $627 million for the next two years.

Secondly, Dayton admitted the business to business tax was extremely unpopular among Minnesota businesses. The Minnesota State Bar Association was actively lobbying against the proposed tax plan and hired an outside government relations firm to help in the efforts.

He said: “I heard an outpouring of opposition from business people all over the state. They’re very important to our state and to me.”