Senate Tax Bill finally revealed
Senate Republicans finally released their plan to conform to federal tax change this week – just 20 days before session is required to adjourn. There are many points of agreement in the bill, including a policy that breaks the link between state and federal tax code in order to retain most of the state deductions and exemptions Minnesotans enjoy.
The bill also contains several troubling policies, however, and doesn’t provide meaningful tax relief to average Minnesota workers, families, and senior citizens. In fact, the overall bill provides an average $10 tax cut to the lowest income-earners but an average $159 cut to those earning over $150,000. Much of the savings come from a cut in the lowest tax rate, but that doesn’t mean the lowest earners see the benefits. The highest earners receive the largest cash benefit.
One of the most glaring provision spends $82 million for even more estate tax cuts for about 350 Minnesotans inheriting between $3 million and $5 million. This does nothing to help small businesses and farmers, who already have a $5 million exemption in current law.
Another concerning provision requires future budget surpluses to trigger a 0.1% rate cut.
Requiring future surpluses to fund tax cuts sounds like a good plan, but the truth is that just like family budgets, the state’s finances ebb and flow. This is a risky way to budget and a disingenuous way to provide tax relief. Recent state surpluses have allowed us to invest in statewide all-day Kindergarten, tuition freezes, and workforce development, and we’ve finally restored a savings account to avoid property tax increases and school funding shifts the next time the state’s in budget trouble. If this bill were in place, the legislature wouldn’t have been able to invest in any of those priorities.
In contrast to this plan and the House Republicans’, which is heavily tilted toward corporate tax breaks, Governor Dayton’s tax proposal ensures more than 300,000 Minnesotans are protected from tax increases created by President Trump and Congress. With tax cuts for more than 2 million Minnesotans, Governor Dayton’s plan is much more efficient at helping Minnesotans save more money while keeping the state on strong financial footing.
The next several days will be dedicated to finding compromise to protect Minnesotans from tax increases next year. It is a goal Senate DFLers all share, and one that can be accomplished if the legislature also adopts a shared goal of protecting the state’s budget and services from long-term harm. (SF 3982)