Dayton’s tax plan focuses on workers, not the wealthy

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As Minnesotans wrap up filing their 2017 taxes this month, the Legislature is already focused on next year’s tax deadline. Federal tax reform passed late in 2017 means that unless the Legislature takes action, at least 300,000 Minnesotans could see a tax increase next spring, and everyone could face a very complicated tax-filing process. Simply following the federal changes, however, could cause a tax increase for even more filers. It’s a complicated scenario that will consume the remainder of the legislative session.

Governor Dayton set an early framework for this discussion with a comprehensive tax plan released two weeks ago. The Governor’s proposal would bring new tax cuts to 2 million Minnesotans while protecting wage-earners from any tax increases due to federal changes. His bill sets a clear focus: Minnesota working families and individuals who haven’t enjoyed the same level of tax relief as big businesses during the last 12 months.

President Trump’s tax bill sent 92% of the tax benefits to corporations and the wealthy. The independent Tax Policy Center estimates the top 1% in the nation will see an average $51,140 tax cut under the bill. Corporations received a 40% reduction in their tax rate and a bevy of permanent tax breaks. Meanwhile, most deductions and credits in law for individuals phase out by 2025.

The Governor’s bill provides at least $186 million in tax benefits that are especially useful to small businesses and farmers, but it does not completely conform to all federal business tax breaks. Instead, his plan directs that relief to working families and senior citizens.

Specifically, Gov. Dayton’s tax proposal would ensure no Minnesota wage earners pay higher taxes, while providing more than 2 million Minnesotans with tax cuts totaling $319 million in relief.

More than 1.9 million families would see an average tax cut of $117, and 329,000 lower-income families would see an average additional tax cut of $160.

Unfortunately, Senate Republican leaders have yet to reveal their plan or discuss any conformity ideas that have been introduced to the Tax Committee. That work hopefully begins immediately after the spring recess. This type of tax overhaul demands careful consideration. It would be a disaster to repeat Congress’ mistake and push major changes through without allowing any public input or deliberation.