After contentious debate, Minnesota Senate approves income tax cut, Social Security tax elimination – Reuters

0

ST. PAUL — The Minnesota Senate on Thursday, April 7, voted 42 to 24 to lower the rate of the state’s lowest income tax bracket and to eliminate the state tax on social security benefits.

Pushing to permanently cut income taxes for Minnesotans was a top priority for Republican lawmakers heading into the 2022 legislative session. And they argued that with a budget surplus of $9.25 billion dollars, the state was able to rewrite the tax code to provide an ongoing benefit to Minnesota taxpayers.

After more than twohour-long debate, the chamber moved the proposal forward, but it faces a steep path in the Legislative Assembly. Minnesota Democrats, who control the House of Representatives, have opposed permanent income tax cuts and instead favored higher tax credits for the state’s families, workers and seniors .

Under the proposal, the first bracket of state income tax would be reduced from 5.35% to 2.8%, a move that would affect everyone who pays the tax. The bill’s authors estimated that a couple earning up to $100,000 a year would see about $1,000 in savings under the proposal.

And overall, 2.4 million taxpayers could see a reduction as a result of the change, they said.

“Our state coffers are full but the people of Minnesota are still struggling,” said the bill’s author, Sen. Carla Nelson, R-Rochester. “It’s not a one-time gimmick we’re offering, it’s permanent, month after month, paycheck after paycheck, year after year, tax relief and that’s what Minnesotans need.”

Nelson’s proposal also removes a state tax on Social Security benefits. If approved, the changes would cost $3.3 billion next year and $5 billion over the next two years.

The Democratic-Farmer-Labour lawmakers said the plan would provide benefits to wealthy Minnesotans and said the state should instead offer assistance to middle-class and more needy residents. And they raised concerns about using a one-time budget surplus for a permanent tax cut.

“We have a tax bill that gives a huge tax cut to the top two percent,” said Sen. Jason Isaacson, DFL-Shoreview. “So hopefully we’ll think about it and move on and maybe make better decisions about our taxes and support those who desperately need it.”

Democrats have proposed amendments on the floor that would add a provision to send $500 rebate checks to Minnesotans below a certain income threshold, provide a larger child or dependent tax credit, and increase the state student loan tax credit at $5,000. These proposed additions were rejected.

Nelson noted that she plans to submit a second tax bill this year that may include additional credits and refunds.

Senate Republicans voiced support for the proposal and said low- and middle-income Minnesotans would get the biggest percentage tax break. Minnesotans contributed to the state’s budget surplus, Republicans said, and now they’re asking to get some of it back.

“We heard loud and clear from people across the state, ‘Give the money back,'” said Senate Majority Leader Jeremy Miller, R-Winona. “We think it’s very, very important to put more money in the pockets of Minnesota workers on every paycheck.”

Follow Dana Ferguson on Twitter

@bydanaferguson

call 651-290-0707 or email

dferguson@forumcomm.com.



Source link

Share.

About Author

Comments are closed.