Tim Walz tax hikes caused battles with Minnesota business

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

Eric Gibson, then president of Ultra Machining Company, recalled asking Walz whether the Democrat believed that high corporate and state taxes hurt 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—‘ moment,” he recalled to CNBC, confirming Gibson’s account. “That’s not what I wanted to hear,” said Baker, president of McFarland Truck Lines.

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

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

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

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

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

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

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

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

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

As Harris prepares to release her first economic policy plans later this week, investors and business owners…