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Minnesota GOP, DFL spar over proposed tax hikes

(The Center Square) – Despite the GOP swearing they won’t approve any tax increase, Minnesota House Democrats pitched a wide range of tax hikes in packages unveiled Monday.

The bills follow budget negotiations and a $52.5 billion budget target released by House Democrats, exceeding the target of Gov. Tim Walz, a Democrat, and the Senate GOP.

A House Transportation Committee omnibus bill aims to hike taxes by $627 million over two years by tying the motor fuel tax to inflation, modifying registration tax calculation, and taxing transit in the Twin Cities metro area, among other items.

“The House DFL budget assists those most impacted by COVID-19: our students, workers, families, and small businesses,” Speaker Melissa Hortman, DFL-Brooklyn Park, said in a statement. “Our budget raises progressive revenue to fund the priorities that Minnesotans value, help them weather what’s left of the pandemic and then thrive once it’s behind us. Minnesotans deserve a budget that will help them recover, not a Republican plan that makes unnecessary cuts and prioritizes those who did the best during COVID.”

A DFL push to raise the gas tax previously failed.

The House DFL tax bill seeks to expand the state’s Working Family Tax Credit and creating a fifth tax bracket with a rate of 11.15% for incomes over $1 million for a couple filing jointly (or $500,000 for single filers).

The bill also exempts taxes for businesses that received up to $350,000 in federal Paycheck Protection Program (PPP) loans and tax relief on up to $10,200 of unemployment benefits.

The GOP-led Senate has already passed a bill that seeks to exempt all PPP loans from state taxes.

The DFL education bill aims to create $722 million of new K-12 spending for K-12 on higher preschool funding and recruiting more teachers of color.

The House DFL’s early childhood budget spends nearly $600 million to help close the learning gap for young Minnesotans It also provides monthly payments to providers and frontline workers.

The higher education budget would spend $110 million on Minnesota’s public universities by freezing tuition at Minnesota State and increases funding to the State Grant Program impacting over 75,000 students.

The DFL package also includes earned safe and sick time and emergency paid leave for health care workers.

Senate Republicans oppose any new tax increases, pointing to the state’s projected $1.6 billion surplus and $4.8 billion of incoming federal aid.

Senate Majority Leader Paul Gazelka, R-East Gull Lake, called the proposed fifth tax bracket “a bad idea.”

“In Minnesota, you’re probably aware that we are one of the highest-taxed states in the whole country, and yet Democrats in the House say ‘we need more, we want more taxes,'” he said in a video response. “That’s the last thing we need right now.”


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