With 30 days left in this legislative session, Republicans have yet to present a tax conformity plan that is needed to avoid an automatic tax increase on 300,000 filers that will occur if no compromise is reached.
Republicans have been working harder to criticize this plan than to come up with one of their own. This week, they distorted the numbers to claim every Minnesotan would see a tax increase if the Governor’s plan passes. In reality, no Minnesota wage-earner would see a tax increase and 2 million filers would see a state tax cut. In addition, the nonpartisan analysis shows the Governor’s plan makes the state’s tax system more progressive – in other words, the balance between what rich and regular Minnesotans pay becomes fairer.
This week, Governor Dayton highlighted a handful of the 2 million Minnesotans who would see tax cuts under his tax proposal – the only idea on the table at this late point in session. A centerpiece of his plan is a new, $60-per-person tax credit available to all but the highest-income taxpayers. His bill also makes necessary adjustments to avoid negative impacts of the federal bill and retains important tax benefits Minnesotans currently enjoy. Some of those include:
- Work-related travel: Under new federal law, Minnesota employees can no longer deduct money spent on work-related travel on federal taxes. The Governor’s plan would allow 111,000 Minnesotans to save an average $419 annually.
- Property tax subtraction: The federal government now limits the amount of state and local taxes that may be deducted from federal taxable income to $10,000. Governor Dayton’s plan retains the full subtraction in Minnesota, saving 40,000 Minnesotans an average $502.
- Casualty loss deduction: Families that suffer a fire, for instance, may no longer deduct losses incurred on federal taxes. The Governor’s plan allows roughly 800 Minnesotans affected by such loss each year to continue receiving state tax considerations, saving them an average $16,400.
- Mortgage insurance premiums: The Governor’s bill allows 70,000 homeowners paying mortgage insurance premiums to retain the tax break, saving $94 annually.
- Tuition payments: Minnesotans paying for higher education would be able to continue deducting a portion of these expenses under the Governors’ plan, saving 27,000 Minnesotans an average $96 a year.
The most important piece of the Governor’s plan is that, if passed, it avoids a $60 million tax increase on 300,000 Minnesotans next year. It is critical that Republican leaders move on from distorting numbers and work on submitting their own tax proposals as soon as possible so the legislature can spend the remaining 30 days having a real debate about potential solutions.