Senate Republicans outlined their 2020 tax bill proposals
this week, a wish list that spends more than
$1 billion in the first year, with mounting, ongoing costs. Perhaps most concerning, Republicans announced the plan before even knowing the state’s current budget balance – those numbers aren’t released until next week. The tax plan is an election-year wish list that sounds good on the surface but is seriously lacking in fiscal restraint and effectiveness.
Just two of the proposed tax spending items cost nearly $1 billion in the first year: an income tax rate cut and a full exemption of Social Security benefits from state taxes. The income tax rate cut would be the second in as many years. The 2019 Legislature approved, on a bipartisan basis, the first rate cut in 20 years at a cost of nearly $400 million. It would be vastly irresponsible to spend so much on another cut without first understanding the effectiveness and full cost of last year’s relief.
Last year’s Legislature also approved additional Social Security tax relief. The plan to fully exempt all Social Security income from taxes would have tremendous ongoing costs but would benefit fewer than half of Minnesota households currently earning those benefits – about 57% of current recipient households already pay no taxes on this income. Higher-income seniors, a majority of which live in the metro area, would be the main beneficiaries of this tax relief.
It is disappointing that the plan includes no intent to address rising property taxes, school safety needs, or any of the other investments Minnesotans have been asking for. Instead of making impossible promises, Senate DFLers will be championing targeted, sustainable tax-relief proposals that address the rising burden of property taxes and help small businesses, farmers, and working Minnesotans.