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Dueling Journey themes at Legislature as House Republicans unveil tax-cut plan

House Republican Taxes Chairman Greg Davids
MinnPost photo by Briana Bierschbach
House Republican Taxes Chairman Greg Davids: “They say we can’t take an increased tax burden, but with the 2015 House Republican tax bill, I’m here to tell those taxpayers: Don’t stop believin’.”

Minnesota lawmakers want Journey’s “Greatest Hits” to be the soundtrack of the 2015 tax debate.

On Monday morning, as Republicans in control of the state House unveiled a signature $2 billion tax-cut proposal, they gave it a theme song: “Don’t Stop Believin’.” The centerpiece of the bill is a new state version of a federal personal or dependent exemption, which they estimate will cost $539 million over the next two years in lost tax revenue. Republicans estimate that will affect about 2 million Minnesotans for an average savings of about $500 for a middle-class family of four over two years. The bill also phases out the state’s tax on Social Security, for a cost of $236 million in the next two-year budget.

They contrasted their proposal with $2 billion in tax increases passed under DFL-controlled government two years ago.

“After two years of massive tax increases, some Minnesotans I’ve talked to have simply given up hope,” House Republican Taxes Chairman Greg Davids said. “They say we can’t take an increased tax burden, but with the 2015 House Republican tax bill, I’m here to tell those taxpayers: Don’t stop believin’.”

But House DFL Minority Leader Paul Thissen suggested a different Journey track to represent the tax cut proposal: “Separate Ways (Worlds Apart),” because he said some of the biggest tax cuts in the bill are for businesses: The bill proposes to phase out the statewide general property tax paid by businesses over the next six years, a proposal that would cost the state about $453 million over the next two years. “It truly is worlds apart from what Minnesota families need,” Thissen said. 

The tax cut bill has a tough slog ahead with a DFL-controlled Senate and DFL Gov. Mark Dayton; both have been cold to the idea of giving most of the $1.9 billion budget surplus back in tax cuts. Dayton has proposed to spend nearly all of the surplus on early and higher education. 

But Davids said he did consider the governor in crafting his bill: He included a child-care tax credit for families that’s been a priority for Dayton (it’s not increased as much in the House plan), and he opted to leave alone the governor’s signature proposal to raise taxes on the state’s top earners. In 2013, Dayton and the DFL-controlled Legislature raised income taxes on individuals who make at least $150,000 a year and couples who make at least $250,000.

“I want to get this bill signed,” Davids said. “I don't think you start off by going after one of the governor’s prime positions.”

There are a number of other smaller tax cuts and credits in the House Republican proposal:

  • It lowers the tax the state collects on large estates after the owner dies.
  • The bill includes a tax credit to help with student education supplies, loan payments and a special credit for those enrolling in two-year technical colleges.
  • It boosts research and development (R&D) tax credits to start-ups and entrepreneurs.
  • It eliminates the income tax for military pay and pensions.

The bill will get more expensive in the years to come. By 2018-2019, the tax cuts will cost about $900 million more than they do now, but Davids said he thinks that increase is “manageable.” The tax bill also puts an extra $100 million into the budget reserves to help buffer from those increases.

“Who knows what the economy is going to do. If the economy goes up, this bill is wonderful and we are all a bunch of geniuses,” Davids said. “If the economy goes down on us, we are still geniuses, but the numbers don’t look as good.”

House Speaker Kurt Daudt said the bill will start moving through committee this week. 

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Comments (21)

Irresponsible

The House would be crazy to give those kind of cuts at this point. We need to improve our infrastructure before they start handing back money to billionaires. How about putting music and art back into our schools?

De javu all over again...

It's 2000 and the state is in fine financial shape with a nice surplus. What to do, what to do. The Democrats said let's put it into the schools, the Republicans said let's make a permanent tax cut and Governor Ventura said let's rebate today's surplus and see what tomorrow brings. Which view likely best reflected reality? Seems to me the best choice was that made by Jesse Ventura the "Rainman" of state government, he showed a lot more wisdom than either party: surpluses come and go, this is the best option for the here and now. And the worst choice: using a one time surplus as the basis for a long term tax cut. The 2000 Republican tax cut insured that surpluses went away and stayed away through the entire TPAW era: one budget crisis after the next. And now, 15 years later, we have our very next surplus and what is the Republican reaction: Do the exact same thing that made a 12 year mess out of our state's finances after the last surplus.

Definition of Insanity

"doing the same thing over and over and expecting different results. or perhaps forever deficits and no prosperity (other than the super wealthy) is the Republican creed?

"doing the same thing over

"doing the same thing over and over and expecting different results"

That Has been mantra of metro public schools for the past 30 years. Still is.

How about some middle ground?

How about some middle ground? Some good aspects that deserve consideration:

- The R&D Tax credit for small businesses
- Tax credit for two year technical college
- End of taxation of SS benefits (MN is one of 6 or 7 states that tax SS benefits)

Why couldn't the Dem's agree to these?

Any why not change the estate tax to be the same as the Federal estate tax?

Middle ground...

What seems reasonable sometimes is not:

The 2 year college tax credit would require the recipient to be earning about $40,000 per year in order to make a significant dent (50%) in their tuition bill. Of course if one were to be making $40,000 per year one would likely not be in community college trying to establish a new career that likely starts at under $40,000 per year.

And why give a tax cut to those who least need it in the name of symmetry?

Agree on R&D credit and SS Benefits.

Much like the previous instances described

It is likely that the economy will suffer within the next two years, tax revenues will drop, and deficits will return.

Since our present and recent legislatures have increased spending over 8% per biennium while raising taxes to pay for the spending and increasing mandates on our schools and healthcare systems, it is also predictable that these actions cannot be sustained for very long.

Fortunately each side can assign blame and say "I told you so" since tax cuts for some, raising taxes on many, and always increasing spending all contribute to the collapse.

Maybe we should try something different.

Wow

"... an average savings of about $500 for a middle-class family of four over two years."

Or $250 per year (for two years only).

Or $62.50 per person per year.

Or $5.21 per month.

Can anyone believe this stuff?

Months and months of Republican bawling about "massive tax increases" causing "unbelievable family budget pressure;" all their self righteous boilerplate rhetoric; their totally confusing, destructive, chaos-producing fiscally incompetent "management style;" all for the sake of their monumentally boring, annoying and mindless, "Tax cuts! Spending cuts! Regulation cuts! THOSE are the keys to prosperity!" mantra.

So we've waited in suspense and anticipation of the unveiling of their Grand Plan to solve the tax and spending part of those problems and what does it amount to?

$5.21 per month in "tax savings" per Minnesotan for two years.

"What? That's it!? That's all you got!? That's your solution to what you keep calling the Biggest Problem in Minnesota's history? FIVE DOLLARS AND TWENTY-ONE CENTS A MONTH!? And that's going to solve the financial problems you've been telling me Big Government has been causing me and my family?.. Hello?"

I would GLADLY pay an extra TEN dollars (and 21-cents) a month in taxes if Republicans would just zip it, pack all their idiotic plans in their sad brief cases, and go a way.

FIVE DOLLARS AND TWENTY-ONE CENTS A MONTH...

In exchange for...

ONE BILLION DOLLARS LESS HEALTH AND HUMAN SERVICES FOR MINNESOTANS...

INCLUDING GETTING RID OF MINNESOTA CARE (one of the BEST real world practical family budget things that has happened to a LOT of hard working Minnesota families since it was created).

And those are just the more blatant, obvious cuts and smoke and mirrors shifts included in the ALL committee budgets in order to "meet the targets" required to provide that itty bitty wimpy wimpy "tax cut."

AND WE HAVE A TWO BILLION DOLLAR SURPLUS!

AND REPUBLICANS WOULD THROW THAT ALL AWAY JUST SO THEY CAN SAY, "WE CUT TAXES, JUST LIKE WE PROMISED!"

THEY'D THROW IT AWAY JUST SO YOU, ME, AND OUR NEIGHBORS WOULD HAVE AN EXTRA FIVE OR SIX BUCKS A MONTH (maybe).

Wow.

Even if you consider yourself a Republican, how could you vote for ANYONE that uses their intelligence, "political skill," energy, and legislative work time to come up with strategies and do all they can to make things like that happen?

Deficits to come.

This is classic republican strategy. Wipe out a surplus to create a deficit as a justification for further cuts to the infrastructure. Starve the beast on steroids....

Why just the Republicans

Why is it always blame the Republicans when the budget goes into the tank? We know the surplus isn't long lasting so what do the DLFers do? Make more permanent spending. At least Bakk is being more tempered because he knows that too much spending increases also bring budget deficits quickly. That's what happened before and no one wants to admit it. The tax cuts before were small. But the economy went down and the state did not cover it's obligations. Now we have a ton of one-time money after the biggest tax increase our state has ever seen and the guv wants to permanently spend much more than we can take. Why don't you think he is asking for other money for infrastructure? Because he needs it.
Out state government spending has increased higher than inflation. And with family incomes flat, it hurts families more when the taxman comes.
So let's get real about our state spending and put the blame where it needs to be. At some point you run out of money to take. Then what? Can't blame the Repubs then.

Their tax cuts will cost $900 million

More in 2 years. Surely to be paid by taking money from schools, healthcare, middle class and the poor. This party has been insane for more than 30 years.

The messaging is so strange

If you really want to emphasize that your party is stuck in the past with no new ideas there's nothing like an overplayed song from 1981 to drive that point home.

This is a legislative agenda

…for the Republican base: that is, business owners and the well-to-do. Lessening my tax burden by $5+ per month is not going to have a significant effect on my retiree lifestyle, nor will it significantly effect the lifestyle of my grandchildren or their parents. Failure to fund the education of my grandchildren, or of my neighbor's children, or to build up the state's reserves for the next economic downturn, will have far more effect, and it will be negative. Lowering the tax burden on large estates will help create a Minnesota version of the aristocracy, and it's not their money anyway.

And so on. When "tax cut" is the only economic policy you know, every discussion of revenue begins and ends with that same, usually empty, phrase.

New and improved Republican estate tax plan

Condensed version: 900 people/estates will get $340 million in tax breaks which is almost twice as much as Republicans are proposing to spend on one million students in Minnesota.

Let Me Suggest a New Theme Song

for all of us to bring to mind whenever we hear the latest Republican plans to take MN down to the economic prosperity level of Mississippi,...

or that deregulatory paradise, Somalia,...

that song being Kenny Loggins' "Danger Zone" (from the movie Top Gun).

It's from 1986, just about the same time Republicans started endlessly singing (very badly) their "tax cuts are ALWAYS good," and "government is the problem" song.

It's particularly apt because, even though they can't bring themselves to face the reality of what they're trying to do,...

our Republican friends are ALWAYS trying to work destruction,...

and take us very squarely into the economic, political, intellectual, and spiritual,...

(in that they don't need the "god" they claim to worship because they already think they know the absolute truth - in fact they'd prefer it if God would just keep God's mouth shut since the God of Jesus Christ tends to call their plans for punishing the poor for their own personal fun and profit into question),...

- they're ALWAYS trying to take us into what the Hebrew Prophets clearly identified as the "danger zone" for any society that ventures into it.

They don't seem to have the ability to conceive of taking us anywhere else but,...

"Right into the danger zone."

Amen

I can't claim to be anywhere near a Bible scholar, or even a regular reader. But whenever the issue you mentioned pops up I think of the story of the rich man who asks Jesus what he needs to do to enter the kingdom of heaven.

Jesus tells him to keep some of the basic commandments, and when the rich man says he abides by those things and asks what else he can do, Jesus tells him to sell everything he owns and give all his money to the poor.

That, of course, was too much for the guy and he left, "feeling disappointed" (I think it says). I always laugh a little to myself when I think of that (Christian principle) and what we so often here from conservatives regarding their devout and unshakable faith and devotion to seeing to it that America returns to the Christian principles on which it was founded.

Well, Greg

At least you're hearing Kenny Loggins. When I see or read the latest from a state GOP rep, I hear the theme from Gilligan's Island. Of course, there would be no professor because...well, science.

No tax cuts, particularly for wealthy businesses and individuals

Who is doing really well today? Large companies and wealthy individuals. Is the business of the state to make them more profitable and prosperous? That is socialism for the rich.

Who is not doing so well today? Poor children, who are growing annually in number, and have more and more difficulty in striving to join the middle class. Frail elderly, who are struggling to live independent or life with some quality of life in nursing homes. Young adults who are having more and more difficulty doing the normal things young adults do - get married, have children and buy houses - because of their massive loans and difficulty in finding jobs to match their skills and pay off their loans. Farmers - who are trying to get their crops to market and farm without polluting the soil, air and water. Small businesses - who struggle to find start up capital. Older workers - who are getting pushed out of jobs in part due to the lack of affordable retraining opportunities and the cost of healthcare. Commuters - who are spending more non-quality time in the car as congestion goes up.

Minnesota has a host of real needs. One can debate their priority while still acknowledging at the minimum most of them are very important. If you want workers to have more money to spend, tax cuts is not a solution. A $500 dollar a year tax cut is the equivalent of a $0.25 increase in hourly pay for a full time workers.

Increasing family income is best achieved by responsible businesses sharing more of their prosperity with the worker, rather than saving it for overpaid executives and stockholders - or spending money to buy back stock, the most common and least efficient way to build company value. Republicans of course want to lighten the burden on business, with no expectation that they use any of this money to put into investment in their workers or market growth. That turns into a straight kickback for campaign contribution - of no benefit whatsoever to the public interest.

Republican Budget

If you agree that the goal is to disable government, reward the rich, stop all support for the poor and pretend that it is all "new" then this Republican budget is for you.
Apparently Wisconsin and Kansas are the new promised lands.
If you see that Minnesota's economy is booming, people are enjoying a better way of life and that our children are our future, then the Republicans have nothing for you.

Straight out of the Bush playbook

The House Republican tax plan is a near-exact replica of the "Bush tax cuts" plan of the early 2000s. It works the same way. It gives "the common folks" (the middle-class) a little bit in feel good" tax savings up-front, and then gives wealthy individuals and businesses MASSIVE tax savings in the "out years."

Here's a rough sketch of how Republicans are trying to implement Bush-like tax cuts in Minnesota:

1) "Regular people" would get $540 million in tax savings over two years on a one-time basis ($5.21 per month per person);

2) Senior citizens receiving Social Security benefits with incomes large enough to pay taxes (more than $25,000 per year for single people, $44,000 for married couples) would see modest tax savings every year.

3) Businesses - ALL businesses - would, after 2021, realize property tax savings of at least $850 million per year, IN PERPETUITY, if the general property taxes businesses pay are phased out after six years.

And, as a bonus, just the Social Security and businesses property "tax expenditures" (spending on tax cuts) would create a perpetual $1 billion cut to the General Fund that pays for most of Minnesota's services (education, health and human services, etc.).

There are 5.5 million Minnesotans. Only 500,000 of those Minnesotans (less than 10%) are business owners.

The House Republican tax bill says, "We will enact a law that gives 90% of Minnesotans $540 million in tax savings over two years; and then we will give 10% of Minnesotans a minimum of $850 million per year in tax savings EVERY year after 2021."

As mentioned before, that's just the tip of the iceberg of what Republicans are trying to slide by the public in a raft of equally slimy bills (transportation, for example), that are loaded with other spending on tax cuts and too many funding shifts to keep track of. But that, in a nutshell, sums up the conservative Republican vision of how to create a Better Minnesota.

The property tax cut irritates me the most

If we're eliminating property taxes for businesses I'd better not see a fire truck or a snow plow anywhere near one.