House passes scaled back 'smokin' hot' tax bill

The Minnesota House on Wednesday approved $46 million in business tax breaks as part of a last-ditch effort to pass tax relief this legislative session.

Tax committee members rolled out a menu of tax cuts that dramatically reduces the potential impact on the budget from the previous plan DFL Gov. Mark Dayton vetoed last week.

"We want to get a tax bill signed," said Rep. Greg Davids, R-Preston, chairman of the House Taxes Committee.

The new plan offers tax breaks for research and development, investors in new businesses and historic preservation projects. The House passed the measure 73 to 56 and the Senate was set to take it up in the evening.

Legislators also want to give small businesses up front tax breaks when they make capital equipment purchases. Larger corporations would continue to get a tax rebate on the same purchases.

Democrats sharply criticized the plan, saying Republicans outlined a buffet of tax cuts but did not pay for them.

"This is a bill that has a bag of goodies for a select few with no way of paying for it," said Rep. Ann Lenczewski, DFL-Bloomington. "Capitalism seems to have died in Minnesota and now we have to pick winners and losers."

Freezing business property taxes will cost the state $10.2 million over the rest of the budget cycle.

The Mall of America will see tax breaks for its expansion, under the plan. Companies that hire veterans will also get a break.

The tax breaks will cost the state budget about $68.4 million for 2014-15, less than half of what Republicans first wanted.

Budget officials would need to drain about $28 million from the state's emergency budget reserves to pay for the proposed mix of tax breaks.

The tax changes have been a top priority for the Minnesota business groups and their members have pushed hard for tax relief over the last few months.