ST. PAUL, Minn. - The top House Democrat on tax issues said Monday she wants to eliminate a host of tax breaks while cutting income taxes for those of modest means and giving businesses two long-sought tax changes.
House Taxes Committee Chairwoman Ann Lenczewski estimated her bill would eliminate about $200 million worth of credits and deductions for everything from long-term care insurance to corporate research and development.
She said the beneficiaries should compete with others for a piece of the state budget instead of getting special tax treatment.
"We should not be using the tax code to bury this stuff," said Lenczewski, DFL-Bloomington. Lenczewski said her plan would make Minnesota's tax system fairer and easier to understand. She said it would not raise taxes overall but it could be adapted to incorporate a tax increase as House Democrats develop a budget plan. The outlines of that plan are due Friday.
Republican Gov. Tim Pawlenty is set to announce revisions to his budget recommendations on Tuesday.
GOP House Minority Leader Marty Seifert embraced the House Democrats' plan to lower income taxes but blamed them for burdening average taxpayers with higher gas taxes, sales taxes and motor vehicle registration taxes last year.
"It strains their credibility with taxpayers to now all of a sudden be so outraged at how the tax burden hits middle- and low-income Minnesotans," said Seifert, R-Marshall.
Businesses would see a faster change in state law allowing them to pay tax based on their sales, instead of property and payroll, which means their tax bill would more closely track the ups and downs of the economy. They could also deduct the cost of equipment right away instead of spreading it out.
The proposal would lower the tax rates for the two lowest income categories, while creating new simplified tax credits for mortgage interest, charitable contributions and family expenses.
