This week, the Minnesota Senate passed an updated version of the $8.5 billion tax bill that passed last month. This version contained the same core spending — $3.3 billion this year and $2.5 billion every year after to cut the first-tier tax rate and fully exempt all Social Security benefits from taxes. The bill also added a state property tax elimination for business and cabin property; an increase in the homestead market value exclusion for homeowners; an expansion of the Targeted Property Tax Refund; and an increase in the state’s K-12 education and dependent care tax credits.
While the bill contained many ideas DFLers have always supported, it also continued to lean heavily on tax cuts for the ultra-wealthy. Half the tax benefits would go to the top 20% of earners in the state. In fact, $240.5 million would benefit those earning more than $250,000 – that’s eight times more than Senate Republicans have proposed to spend on kids’ classrooms this year.
Senate DFLers attempted to reduce the tax cuts for those earning more than $284,000 per year and for commercial business property and use the savings for items Minnesotans have been begging lawmakers to address: education, property tax relief, public safety investments, and affordable housing. The savings from limiting tax cuts for the wealthiest could have paid for half the special education funding gap facing Minnesota schools [insert your own district’s special education cross subsidy number here, if desired.] Limiting tax cuts for the rich could have sent $100 million each year to every city, county, or tribal government with law enforcement departments to help improve community public safety. Every DFL amendment was either blocked or voted down.
Senate DFLers agree that the size of the budget surplus offers an opportunity to provide strong tax relief; it just cannot primarily benefit the wealthy, and it cannot be the only priority when there are so many other needs across the state. Now that the House and Senate have both passed tax proposals, the two bodies will begin meeting in conference committee to work toward a compromise tax-relief plan before session adjourns on May 23. (HF3669)
