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

Republicans estimate that the tax cut would apply to about 2 million Minnesotans, and save a middle-clase family of four about $500 over two years.

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’.”
MinnPost photo by Briana Bierschbach

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’.”

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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.