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State Representative Jerry Newton
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-5369
For more information contact: Matt Swenson 651-297-8406
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REP. NEWTON CALLS VOTE ON HOUSE TAX BILL DIFFICULT CHOICE, RIGHT DECISION
ST. PAUL, MN - State Rep. Jerry Newton (DFL - Coon Rapids) voted Saturday in favor of the House Omnibus Tax Bill (HF2323) saying new, progressive revenue is needed to maintain a strong Minnesota in the face of the state’s worst ever fiscal crisis. Newton called the vote a hard choice, but the right decision. The bill passed by a vote of 68 to 65 after months of careful work by the House Taxes Committee. The House Tax Bill offers the most significant tax reform in 20 years and raises $1.5 billion in new revenue by eliminating corporate tax loopholes, increasing progressivity in the tax system by raising the income tax on Minnesota’s highest earners ($300,000 and above), and providing for moderate tax increases on alcohol (3-5 cents) and cigarettes (54 cents).
“Nobody likes raising taxes," said Rep. Newton. “That’s why our tax system is so out of whack. For too long lawmakers have been pushing these hard decisions off for another day. Now, facing the largest budget shortfall in state history, we don’t have that luxury. We have to make responsible decisions this year - no matter how difficult or unpopular. Minnesota’s jobs, hospitals, schools, and our economic recovery depend on it.”
According to a Tax Incidence Study released by the Minnesota Department of Revenue earlier this year, the state’s low- and middle-income earners ($113,000 and below) pay on average 12% of their income in state and local taxes while Minnesota’s highest earners ($447,000) pay just 8.8%. The House Tax Bill would address that disparity by creating a new 4th tier income tax bracket for the state’s highest earners and making moderate reductions in income taxes on low-and middle-income Minnesotans. It would also significantly slow the pace of rising property taxes ($3.1 billion since 2002) that have made the state’s tax system more regressive in recent years.
“This bill addresses the need for progressive tax reform in Minnesota,” said Rep. Newton. “Our tax system is out of balance, out of date, and ineffective to meet the demands of a modern Minnesota. This bill helps correct that imbalance, and restores basic fairness in a way that maintains our nation-leading quality of life. In this time of deficit, it ensures every citizen shares in the solution - not just the poor and middle class.”
Governor Pawlenty has indicated he will veto any proposed tax increases aimed at balancing the budget shortfall - even on the state’s highest earners. But Newton has raised objections to the governor’s proposed borrowing plan that would replace tax increases with revenue bonding. Pawlenty’s plan has never been attempted in the history of the state. It would borrow $1 billion from future revenues, accumulate $600 million in interest payments, and take 20 years to pay off. The House rejected Pawlenty’s plan Friday by a bipartisan vote of 130 to 2.
“Abraham Lincoln said once: ‘You can’t escape the responsibility of tomorrow by avoiding it today’,” Newton said. “I couldn’t agree more. We need to have the courage to address these problems now - so we don’t turn a short-term deficit into a long-term problem.”
One provision attracting considerable attention and confusion from realtors and constituents is an effort to reform tax deductions on mortgage interest. The House Tax Bill seeks to reform a decades-old program that disproportionately favors wealthy homeowners who itemize their tax deductions every year. Under current law, two individuals with identical homes and identical mortgages receive different tax breaks: the wealthier individual receives the bigger break. Instead, Newton and his colleagues in the House would change that program to provide an automatic Mortgage Interest Tax Credit for all Minnesotans who pay interest on their mortgage. With average home values in Coon Rapids around $170,000, most residents of Coon Rapids and the surrounding area would see a $420 tax credit they may not have otherwise received under the old formula.
“This provision will benefit the vast majority of homeowners in Coon Rapids,” said Newton. “It is just one more area of reform in this bill I am proud to support - no matter how controversial. I’m not afraid to take tough votes, particularly when I know it will benefit the residents of Coon Rapids.”
Saturday’s vote on the House Tax Bill continued a 6-day series of marathon floor sessions in which lawmakers passed ten finance bills aimed at balancing Minnesota’s record $6.4 billion budget shortfall. Now those bills must be reconciled in conference committees with the Senate before being sent to Governor Pawlenty’s desk. Budget balancing plans between the House, Senate, and governor are different, and rely on the following budget frameworks. Going into the final weeks of the 2009 Legislative Session, Rep. Newton is confident lawmakers will find compromise and a responsible end to one of the most difficult legislative sessions in memory.
“We may have our differences, but I am confident we can all work together to find thoughtful compromise and a responsible end to this legislative session,” said Rep. Newton. “No legislature has ever faced this large of a problem in Minnesota’s history. We have a responsibility to meet that challenge with wisdom and courage. Our future depends on it. I don’t take that responsibility lightly, and I’ll be working hard to ensure our decisions today build a stronger, more prosperous Minnesota.”
Rep. Newton encourages all residents of District 49B to contact him directly with their questions, concerns, and suggestions in the coming weeks. Newton can be reached by phone at (651) 296-5723 or by email at rep.jerry.newton@house.mn. The legislative session is scheduled to adjourn May 18.
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