Gov. Dayton seeks bigger tax cuts in new budget

  • Article by: BAIRD HELGESON , Star Tribune
  • Updated: March 6, 2014 - 8:51 PM

His budget calls for $616 million in relief, up from the $500 million sought by House DFLers. Reserves also would get boost.

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Gov. Mark Dayton

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DFLers have moved into a tax-cutting frenzy at the State Capitol.

Gov. Mark Dayton says he now wants to cut taxes by more than $616 million, up from the $500 million initially proposed by House DFLers.

The new proposal, part of the governor’s budget released Thursday, would offer tax relief among married couples, lower-income working families, college students, day-care users and small employers.

“Our improving economy has greatly improved the state’s budget forecast, giving us the opportunity to put more money in the pockets of Minnesota families and businesses,” Dayton said.

House DFLers, meanwhile, pushed their tax package to a floor vote on Thursday, sending it to the Senate in record time by a vote of 126-2.

“We want to make sure that we get that tax relief out to Minnesotans in as timely a manner as possible,” said House Speaker Paul Thissen, DFL-Minneapolis.

Dayton would use about half of the $1.2 billion projected budget surplus to lower taxes. But he also intends to use some money to bolster budget reserves against future downturns, give raises to state-paid health care workers and ensure that no student in Minnesota is denied a hot school lunch.

Dayton is urging legislators to pass the tax package by the end of next week, giving the state time to implement the changes before tax returns must be filed. Some of the proposed tax breaks would be retroactive to 2013, such as the adoption credit and an income tax break for people who lost their home to foreclosure or a short sale.

“Minnesotans should know if the Legislature doesn’t act, it will cost them some of the tax savings I am proposing,” Dayton said.

GOP, Senate see differently

Republicans are generally supportive of the tax relief proposal but blasted DFLers for imposing more than $2 billion in new taxes last year and now wanting credit for returning a portion of the extra revenue.

“Less than half of the surplus is being given back to taxpayers,” said Deputy House Minority Leader Jenifer Loon, R-Eden Prairie. “We can do better.”

The DFL-led Senate doesn’t share the same urgency to pass the tax bill in the next week, and Senate leaders have not shown the same enthusiasm for cutting taxes as deeply.

“I think it’s getting late to make the argument that we need to pass this urgently, that people are filing their returns,” said Senate Majority Leader Tom Bakk, DFL-Cook. “It may take us a while to wade through all the provisions.”

Bakk has also expressed reluctance to repeal business-to-business sales taxes that he pushed for last year.

The governor is proposing eliminating the so-called marriage penalty, which means 650,000 married couples would no longer pay higher income taxes than single people making the same amount of money.

He also wants to expand the Earned Income Tax Credit, making an additional 14,000 families eligible and giving an average savings of $334 a year to those who qualify.

The governor would also expand tax credits for child care, saving those taxpayers who qualify an average of $430 per a year. College graduates with student debt would save an average of $140 a year under the plan.

  • Dayton’s plan for the $1.2 billion surplus

    Tax breaks for consumers: $301 million

    Tax breaks for businesses: $232 million

    Eliminate gift tax: $18 million

    Changes to estate tax: $25 million

    New spending: $162 million

    Budget reserve increase: $455 million

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