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Contributors in Minnesota: Patrick Condon, Baird Helgeson, Patricia Lopez, Jim Ragsdale, Abby Simons, Rachel E. Stassen-Berger and Glen Stubbe. Contributors in D.C.: Allison Sherry, Corey Mitchell and Jim Spencer.

On second try, Minnesota Senate passes DFL tax plan

Posted by: Baird Helgeson under Gov. Mark Dayton, Minnesota legislature, Democrats, Republicans, State budgets Updated: April 29, 2013 - 6:27 PM

Minnesotans would pay taxes on clothing, over-the-counter drugs and even Super Bowl tickets, under a sweeping tax overhaul the Minnesota Senate approved Monday night.

The Senate approved the nearly $2 billion package of tax hikes an hour after a bruising defeat of the same measure. The defeat sent DFLers scrambling to a private meeting and then they returned, grim-faced, and approved the measure 35 to 31.

The DFL-led proposal would broaden the sales tax, but dramatically lower the overall rate for all taxable items to its lowest level in 22 years.

The corporate income tax rate would be lowered to its lowest level since the 1960s and low-income Minnesotans would get an annual rebate to offset those hardest hit by the clothing tax. Like in the House plan, the Senate package imposes a sports memorabilia tax that could help pay the state’s share of the new Minnesota Vikings stadium.

Republicans say Democrats violating their pledge to only boost takes on high earners and are instead raising taxes for all Minnesotans to appease their hunger for new spending.

“With this bill we are taxing Minnesotans to death,” said Sen. David Osmek, R-Mound.

The DFL-led proposal would lower the sales tax rate to 6 percent from 6.875, which will save Minnesotans $1.1 billion over the next two years. But the state makes back all of the money through broadening the goods and services subjected to the sales tax, like clothing, auto repair, dating services and haircuts.

To ease the pain of the clothing tax, Senate DFLers are offering a tax credit so that a family of four earning $46,000 a year would get a $105 credit.

The proposal differs significantly from the House and DFL Gov. Mark Dayton. The three sides will spend the final weeks of the legislative session working out differences and finding one plan they can all agree to.
 

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