House DFL seeks big jump in alcohol, cigarette taxes

Minnesota House Democrats want to hike the alcohol tax roughly 50 percent in a new proposal to balance the state budget, pay off school debt and provided tax breaks for homeowners.

Consumers of wine, beer and spirits would spend an additional $350 million over the next two years; or about $25 a year for someone who has a beer a day.

The new tax hike is part of a comprehensive tax overhaul package unveiled Monday designed to beat down a $627 million budget and allow for more than $1 billion in new spending.

House Speaker Paul Thissen said the bill reflects Democrats' pledge to square the budget and speed the repayment of public schools.

"This bill is how we live up to those promises," said Thissen, DFL-Minneapolis.

House Republicans remains opposed to tax hikes and say they are not necessary as the state recovers from the recession.
Other than modest trims to wipe out the deficit, Republicans note that the economic forecasts show an end to the cycle of deficits in coming years.

House Democrats are proposing raising taxes on the top 1.1 percent of the state's highest earners, which would hit those with a taxable income of more than $400,000 for married filers.

Democrats chose their numbers to match federal levels that President Obama successfully negotiated with Republicans in Congress.

House Democrats continue to push a temporary surcharge on those making more than $500,000 a year to pay off the $808 million owed to public schools. Dayton and Senate Democrats have not embraced the idea, which would make the state's income tax rate the third-highest in the nation, even if only temporarily.

Thissen said he believes most Minnesotans will support the plan.

The DFL proposal includes a more than $1.60 per pack cigarette tax hike and closes some corporate loopholes, which allow companies to shelter profits overseas.

Democrats want to use some of the money to help the city of Rochester with a Mayo Clinic expansion and prodes money for expansions of 3Ms Maplewood campus and the Mall of America.