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Minnesota lawmakers feud over tax bill

(The Center Square) – Minnesota lawmakers held dueling news conferences to address respective points of view in their feud over a new tax bill.

Democrats claim the bill will bring the biggest tax break in history, while Republicans in the minority say the DFL tax bill includes nearly $10 billion in proposed tax hikes while the state has a $17 billion surplus.

“The $9.69 billion in tax hikes we’ve tracked down is simply stunning. It is also incredibly brazen and tone-deaf as Minnesotans continue to struggle with $3 gas, inflation costs on their grocery basics, and tight labor market driving up the cost of everyday services,” Senate Minority Leader Mark Johnson, R- East Grand Forks, said in a statement.

Republicans say six bills include the tax hikes:

  • Transportation budget bill: $3.56 billion in tax and fee increases including $736 million over four years for the motor vehicle registration tax, and $512 million in retail delivery fees.
  • Housing bill: $744 million from the Metro Sales Tax.
  • Paid Family Medical Leave: $2.9 billion tax increase from every employee and business in the state.
  • 5th tier income tax: $1 billion increase with new fifth tier tax.
  • Corporate franchise tax: $1.169 billion increase on businesses.
  • Cannabis: $269 million in fees and taxes on legal cannabis.

Sen. Carla Nelson, R-Rochester, said the cost of paid family medical leave could be a $60 million tax increase to school districts: $30 million paid by employee school districts and $30 million paid by teachers and school staff.

The fiscal analysis on the cost of PFML to local governments hasn’t been completed.

“My local communities have been watching the movement of all the mandates across the Legislature and they are telling me they are growing increasingly nervous,” Nelson said in a statement. “The pile of unfunded mandates and regulations being contemplated will carry tremendous costs for our schools, cities and counties, and that means they will have no choice but to raise property taxes to meet their regulations.”

House Speaker Melissa Hortman, DFL-Golden Valley, said the Republicans double-counted some of the proposed tax hikes and said lawmakers will “sculpt” the fees on a case-by-case basis.

In a news conference, Hortman compared the paid family leave program to the unemployment trust fund.

“We all pay a tiny increment of each of our paychecks and our employers do for us as well, so that if we are laid off and we experience unemployment, that fund is there for us when we need it,” Hortman said. “Paid family medical leave would work exactly the same way,”

The House DFL Tax Bill would implement two new taxes: a millionaires tax on the top .08% of earners a new highest rate of 10.85% for those earning $1 million as married filing jointly, or $600,000 as a single person, and a worldwide reporting requirement for multinational corporations.

“With a historic budget surplus, we are bringing forward the largest tax cuts in state history,” Hortman said. “Our bill contains tax cuts in the form of credits, rebates, and other provisions that will help Minnesota workers, families, and seniors.”

Republicans accused Democrats of failing to end the tax on Social Security. In response, House Property Tax Division Chair Dave Lislegard said the bill “will improve people’s lives.”

The DFL bill includes full Social Security state income exemption for those earning less than $100,000 annually married and filing jointly or $78,000 as a single person. The bill includes direct rebates of $275 per person, with an additional $275 for each dependent, up to three, which would reach more than 2.5 million Minnesotans.

The bill provides a Child and Working Family Tax Credit of up to $1,175 per child.

The legislature must pass a balanced budget for Gov. Tim Walz to sign before session ends.

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