Senate DFLers moved to put more of the state’s surplus in the pocket of average Minnesota working families and seniors in the tax bill that passed this week. Unfortunately, the final bill that passed will largely benefit the highest earners and puts the state budget in a dangerous position of having to choose between tax cuts for the wealthy or our kids’ schools.
The Republican budget spends $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. On the surface, these sound like popular ideas. But the numbers show that half the tax cuts go to the top 20% of earners in the state. In fact, $240.5 million goes to those earning more than $250,000 – which is eight times more than Senate Republicans have proposed to spend on kids’ classrooms this year.
Senate DFLers worked to improve the bill by retaining tax cuts for most taxpayers but cutting them off for those earning the most and using the savings to improve current tax credits that help Minnesotans paying for education expenses, childcare costs, and student loan payments. DFLers also offered an amendment to replace an inconsistent rate cut in the Republican bill with $1,000 tax rebate checks that would be sent to Minnesotans this year.
The benefits of the DFL tax cut approach:
- Everyone except the wealthiest Minnesotans are guaranteed $1,000 per couple, or $500 for single filers. The Republican plan only gives $1,000 to couples earning more than $100,000 – leaving 2.1 million Minnesotans with far less than that.
- Only Minnesotans get the tax cuts, instead of 265,000 people that do not live in the state that benefit from the Republican plan.
- The DFL plan doesn’t exclude 542,881 lower-income taxpayers. The Republican plan does.
- The DFL plan sends $2 billion in tax rebates to all but the wealthiest Minnesotans this year to help them afford rising costs. The Republican plan sends $1 billion to people earning more than $125,000.
The same day this bill passed, the Property Tax Subcommittee considered three bills that would spend another $1.5 billion or more through 2025 to cut commercial building property taxes by the same amount. All of these bills have Senate DFLers asking just how much Republicans are willing to do for tax cuts that help the wealthiest Minnesotans and big corporate owners. (SF3692)