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Dayton's new plan: No sales tax overhaul, tax the rich

  • Blog Post by: Rachel E. Stassen-Berger
  • March 14, 2013 - 12:15 PM

Gov. Mark Dayton abandoned much of his major taxing plans in his latest budget proposal and returned to his "Tax the Rich" political roots.

The new budget the governor rolled out on Thursday would increase income tax on the wealthy to raise about $1 billion for the state coffers. It drops his $2 billion  proposal to extend sales taxes to business and consumer services, which came under blistering criticism from businesses circles and lacked support in the DFL Legislature.

Dayton's slimmed down plan leaves at the wayside his January proposal to give all homeowners up to $500 in property tax rebate. But it still spends about $38 billion over the next two years, including increased spending on education programs and allows for a building projects bill this year.

The new proposal would increase cigarette taxes, which has shaky support in the DFL-controlled Legislature, close corporate tax 'loopholes,' and impose a new 'snowbird' tax, which would force people who live in Minnesota slightly fewer than six months out of the year to pay Minnesota taxes. Dayton said he is unsure that the 'snowbird' tax will pass this year. 

Although Republican leaders and business leaders were relieved that the governor dropped his sales tax plans, they made clear they oppose the income tax increase for wealthy Minnesotans. Republicans also noted that DFL lawmakers have several tax increasing proposals on their own and their fate is unclear.

Asked if he would veto any sales tax overhauls, Dayton said he would not use the word veto but said those proposals lack his support.

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