Minnesota Republicans propose $13 billion tax cut

Republican minority leaders in the Minnesota Legislature unveiled a $13 billion “Give It Back” plan Tuesday to use most of the state’s $17.5 billion budget surplus for one-time and permanent tax cuts, including rebate checks and complete abolition of taxes on social security.

The GOP plan would use one-time money for rebate checks of $1,250 for individuals and $2,500 for joint filers, plus tax credits of $1,800 per child for the next two years. For permanent relief, it would end partial state taxation of Social Security income, lower tax rates and increase exemptions for estate taxes.

Republicans announced their plan a day after state budget officials released an updated forecast showing the surplus held steady, with higher-than-expected revenue offsetting a new law requiring inflation to be factored into spending projections.

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Senate Minority Leader Mark Johnson, of East Grand Forks, said at a news conference that the surplus provides a historic opportunity to return money to taxpayers.

“With over $17.5 billion, if we don’t give Minnesotans tax relief now, when will we?” asked House Minority Leader Lisa Demuth of Cold Spring.

Republicans want deeper cuts than Democratic Gov. Tim Walz and Democratic legislative leaders have proposed and would return more of the surplus to taxpayers instead of spending it on education and other programs as many Democrats want.

While Republicans don’t have the votes to pass their plan as is, they still have leverage they could use to try to get some of what they want. That’s because lawmakers on both sides of the aisle want to pass a public infrastructure borrowing package known as a bond bill. But increasing the state’s debt load requires 60 percent supermajorities in both the House and Senate. And that would require enough Republican GOP votes in each chamber.

Republicans in the Minnesota Legislature unveiled a $13 billion tax cut proposal. (AP Photo/Steve Karnowski)

Johnson said Senate Republicans want a bond bill but also want assurances on tax relief before committing to details of that package. Demuth said the bond and the tax break are “part of the same conversation.” Neither leader, however, would be specific about potential compromises.

The GOP tax plan, which would cost $13 billion over two years compared to the $5.4 billion Walz proposed last month, has similarities that could be starting points for negotiations.

Walz called for rebate checks of $2,000 for families making less than $150,000 and $1,000 for individuals making less than $75,000. Parents could also get an extra $200 for each dependent — up to three. Those making more than the income caps would get nothing, it would cut Social Security taxes for more than 350,000 households, so that 43% of households receiving it would save an average of $278. And it called for up to $10,500 in expanded tax credits for families with children.

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The governor said Monday that his proposal would represent “the largest tax cut in Minnesota history.” As for the GOP’s “Give It Back” slogan, he said, “Join the crowd.” But he said it “makes no sense” to eliminate Social Security taxes for the wealthy.

Minnesota is one of 11 states that tax Social Security to varying degrees. Demuth noted that even some Democrats campaigned last year for full repeal. GOP Rep. Kristin Robbins, of Maple Grove, said their proposal would give 472,000 Minnesotans an average of $1,277.

For permanent tax cuts, eliminating Social Security income taxes entirely would cost about $1.26 billion per biennium going forward, said GOP Sen. Bill Weber, D-Luverne, while income tax cuts of 1 percent for the latter two brackets will cost about $3 billion. The property tax exemptions — from the increase in state land value exemptions — will cost about $70 million every two years.

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For the one-time relief, credit checks would cost about $5 billion, Weber said, while child tax credits would cost about $4 million.

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