House Republicans in the state Legislature want to cut Minnesota’s second-tier tax rate as part of their plans to align the state’s tax code with recent federal changes.
House Republicans in the state Legislature want to cut Minnesota’s second-tier tax rate as part of their plans to align the state’s tax code with recent federal changes.
Rep. Greg Davids, R-Preston, who chairs the House taxes committee, released a proposal Saturday that he said would simplify state taxes so residents will get the most out of the recent federal tax cut bill.
State lawmakers need to update Minnesota’s tax code before their legislative session ends in May or residents could pay more next year and face confusion filling out their returns. The Tax Cuts and Jobs Act approved by Congress in December cuts rates for businesses and individuals, but scales back or eliminates many popular deductions and credits to cover some of the cost.
Davids’ committee is expected to detail the 170-page bill that was made public Saturday afternoon this week. The proposal to reduce the second tax tier from 7.05 percent to 6.75 percent by tax year 2020 would be the first overall rate reduction since 2000.
Minnesota has four tax brackets and the rate paid depends on income. The proposed change would lower rates for individuals earning $25,890, but not more than $85,060 and families earning $37,850, but not more than $150,380.
“Federal tax reform presented a significant opportunity to simplify our state tax code,” Davids said in a statement. “House Republicans’ goal from the onset was holding as many Minnesotans harmless as possible and preventing headaches for filers next year.”
Republicans spent last week criticizing Gov. Mark Dayton’s proposal to conform with certain federal changes. They say the Democratic governor’s tax and budget plans amount to a $1.4 billion tax hike .
GOP lawmakers are using a state Department of Revenue analysis to bolster those claims. The review includes Dayton’s proposal to extend a tax on health care providers beyond its planned expiration at the end of 2019 to fund MinnesotaCare, which provides health care to the working poor.
Dayton also wants to reinstate some taxes the Legislature eliminated last year and raise new revenue from businesses.
The governor has pushed back against criticisms of his plan, saying it would reduce taxes for most from what is current law. The cuts would benefit 2 million working families, administration officials have said.
Republicans, who hold legislative majorities, say Dayton needs to drop his proposal to extend the provider tax in order to clear the way for negotiations on other tax provisions. They say the future of MinnesotaCare should be left to the next Legislature, after the fall election when voters will pick a new governor and decide all House seats.
Senate Republicans are also expected to release a tax-conformity proposal soon. Despite recent criticisms, Democrats and Republicans say they’re hopeful they can come to a deal before the legislative session wraps up in May. Related Articles
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