The goal is plain in the name: the "Minnesota Jobs Recovery Act," Gov. Tim Pawlenty's proposal to cut business taxes by nearly $300 million in the next two years aims to create and keep jobs in Minnesota. Every day's headlines attest to the urgency of that goal. But getting the most bang for every tax-break buck is crucial, since every dollar lost to the state treasury means a larger cut in state services or a need to raise another tax to replace it. Legislators should carefully examine whether Pawlenty is choosing the most effective job magnets.

The showpiece in the Jobs Recovery Act is a proposed 5 percentage-point reduction in the state's corporate income tax rate over six years. The case the Republican governor makes for the cut is all about the state's 9.8 percent corporate tax rate. It's among the highest rates in the country. That high rate deters business investment here, he says.

But rates are never the whole equation in tax calculations. In the case of corporate income taxes, the portion of a corporation's profit that is taxed matters too. Starting in 2005, Minnesota has been steadily shrinking that portion for companies that own property and pay workers in this state. By 2014, only sales in Minnesota will factor in the corporate income tax formula. Companies that are based here and sell to the world -- the kind of companies most coveted by state policymakers -- will gain a tax advantage.

An obvious option for policymakers would be to accelerate that change, so that it's fully phased in this year. That would target the break at Minnesota employers and invite more job creation in the state. By comparison, the rate reduction Pawlenty favors -- an idea being touted nationally by the right-leaning Tax Foundation -- would share the tax break with companies that have no intention of putting more Minnesotans to work.

Pawlenty's proposal also includes an improvement in the cumbersome rules governing a sales tax exemption on the purchase of manufacturing equipment. That exemption now requires filing an application for a sales tax refund. Pawlenty proposes to apply the exemption at the time of purchase, just as retail stores do for food and clothing.

That's a good idea. Bob Kill, president/CEO of the business consulting organization Enterprise Minnesota, said Wednesday that a desire for quicker and easier access to that sales tax exemption was mentioned frequently by the several dozen growth-minded employers he has met in the past six weeks.

An even better idea would be to revisit something considered in the early 1990s, when the manufacturing equipment exemption became law. The notion: extend the exemption to other business inputs. Manufacturers aren't the state's only job creators. Equipment needed by financial service companies, software developers or other employers would seem as deserving of favored tax treatment. A sales tax break would have the added advantage of going only to Minnesota operations, rather than being exported out of state.

LORI STURDEVANT