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State Bar Association Opposes Tax on Justice

Minneapolis (Jan. 22, 2013) - Today Gov. Dayton unveiled a budget plan that includes a sales tax on legal services. If the proposal becomes law, Minnesota would become only the fourth state to tax legal services. The Minnesota State Bar Association strongly opposes taxing Minnesota citizens and businesses that need legal advice to plan for their futures and protect themselves.

Robert Enger, a legal aid attorney from Bemidji and president of the Minnesota State Bar Association, refers to a tax on consumers of legal services as a “misery tax.” Individuals and families often need to hire lawyers when they are vulnerable and suffering; such as a victim of the economy filing for bankruptcy, a family facing foreclosure, or an innocent victim paralyzed by a drunk driver. A sales tax on legal services would push citizens to either forego their legal rights or attempt to represent themselves in the complex justice system. Minnesota’s court filing fees are among the highest in the nation, which creates an access to justice problem that will only be exacerbated by taxing legal services.

The overwhelming majority of states don’t tax legal services because it is widely considered poor public policy and economically damaging. Business will be burdened with significant additional costs, and the tax will be especially unfair to small businesses. Corporations large enough to employ lawyers will avoid the sales tax, while smaller businesses will have to pay. Businesses needing legal assistance to expand or locate in Minnesota may choose to do go elsewhere, and Minnesota law firms with national and international practices will have every incentive to relocate attorneys and staff to one of the many states that do not tax legal services.

Mr. Enger applauds Gov. Dayton’s goal of creating a fairer and simpler tax system. But, he said, “Taxing legal services will harm the middle class. The bottom line,” Enger said, “is that a tax on legal services won't create a better Minnesota. It's a big step in the wrong direction. It would provide some revenue to the state, but at what cost?"

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If you'd like more information, or to schedule an interview with Bob Enger, please call 218-751-9201 or email benger@mnbar.org.





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