With under six weeks remaining in the 2023 legislative session, budget bills are making their way to the floors of the House and Senate. And so is a way to pay for them.
House DFLers who unveiled their tax bill on Monday said it represents the largest tax cut in state history and is aimed at helping those who need it most. Senate Republicans returned serve and claimed that provisions Democrats have touted — if approved without any concessions — would add up to nearly $10 billion in tax hikes on Minnesotans over the next four years.
“What we have tracked down recently in the bills that have been proposed (in the House and Senate) — is almost $9.6 billion in tax increases,” said Senate Minority Leader Mark Johnson, R-East Grand Forks. “With tax filing day tomorrow, Minnesotans should know that Democrats’ budget this year will lead to higher taxes now, and even higher taxes in the future to support their aggressive government growth.”
In March, Democrat majority leadership in the House and Senate reached an agreement with Gov. Tim Walz to increase spending over the next two years by $17.9 billion. While that came following an announced $17.6 billion budget surplus, Democrats say that such a surplus only results in one-time spending opportunities. For that reason, House DFL leaders told the media on Monday they’ve put forward a tax plan, in HF1938, that provides “an ongoing commitment” of generated future, sustained revenue.
“We’re proposing to make the tax code more fair and more progressive to provide for sustainable funding for education, health care, transportation and so much more,” said House Speaker Melissa Hortman, DFL-Brooklyn Park.
Some of those investments contained in the House tax bill include:
- A scaled back elimination of the state Social Security tax that Republicans and DFLers have been sparring over, which would cap elimination at households that earn more than $100,000 annually and singles who earn more than $60,000;
- Creation of a fifth tier income tax bracket that Rep. Aisha Gomez, DFL-Minneapolis, calls the “millionaire tax,” which would establish a 10.85% state income tax for joint filers who earn more than $1 million and singles who earn more than $600,000;
- Imposing worldwide combined reporting under the corporate franchise tax, which Gomez, who serves as House Taxes Committee chair, said will generate more than $1.1 billion in revenue over the next four years.
Rebates checks to Minnesotans will be means tested
The House taxes bill would also set an income threshold on tax rebates to Minnesotans at $150,000 for married filers and $75,000 for individual filers. That rebate would grant a rebate check of $275 for every adult and child in a household under those income thresholds, which would reach 2.5 million Minnesotans who qualify, Gomez said.
“That’s real money at the income level it’s targeted at,” said Gomez, who authored a bill she says will address inequities among Minnesotans that were exacerbated during the pandemic.
Gov. Tim Walz previously proposed rebate checks of $2,000 for joint filers and $1,000 for single filers.
“It’s more obvious today than ever that we have collectively accepted the unacceptable,” Gomez said. “That in a prosperous state in literally the most prosperous nation that’s ever existed we have people sleeping outside. We have kids living in poverty. We have seniors who can’t afford to stay in their homes. We have accepted an economy that works exceptionally well for very few and leaves most of us behind.”
Senate tax bill is forthcoming
Senate DFLers are expected to release their tax bill in the coming days. The fate of a proposed 75 cent delivery fee on all retail goods to homes and businesses remains unclear. That provision was cut from a Senate transportation bill last week after Sen. Ann Rest, DFL-New Hope, who chairs the taxes committee, said she opposed the measure.
Republicans said the provisions they’ve tracked in both proposed Senate and House DFL spending also include:
- A $3.56 billion increase in transportation-related taxes and fees;
- A $2.9 billion increase in payroll taxes to pay for proposed paid family and medical leave legislation;
- $269 million in anticipated revenue raised coming out of proposed regulation of legalized cannabis;
- $770 million in revenue from a proposed metro-wide sales tax that’s still alive in the House.
Republican senators who held their press conference Monday to critique their political counterparts said that the way DFLers have structured their budget and spending includes unfunded mandates that will result in school districts, cities and counties being faced with whether to increase property taxes or cut services.
“Looking at the number of tax increase bills sitting around the Capitol likely to be included in the final bills, we can see Minnesotans are in for a rude awakening,” said Sen. Bill Weber, R-Luverne. “Every Minnesotan will be hit by these tax increases, whether they are shopping in the metro, buying a new car, or updating their tabs. If the current form of paid family and medical leave passes, they will be hit with taxes just for collecting a paycheck.”
Last month Republicans unveiled their “Give it Back” plan which they say would cut taxes by $13 billion with “a mix of permanent tax relief, one-time rebate checks, and short-term tax credits. It includes the full elimination of the Social Security tax cut, a 1 percent tax cut on both the lowest two income tax rates, property tax relief, rebate checks to every taxpayer, and a child tax credit for families.”
Hank Long
Hank Long is a journalism and communications professional whose writing career includes coverage of the Minnesota legislature, city and county governments and the commercial real estate industry. Hank received his undergraduate degree at the University of Minnesota, where he studied journalism, and his law degree at the University of St. Thomas. The Minnesota native lives in the Twin Cities with his wife and four children. His dream is to be around when the Vikings win the Super Bowl.
