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2013 Session Update: Omnibus tax bill passes House

Friday, April 26, 2013

Dear neighbors,

The Minnesota House passed the Omnibus Tax bill Wednesday on a vote of 69-64.  The bill puts an end to a decade of budget deficits and gimmicks and provides a balanced budget into the future.  The tax bill is the product of several months of hearings and debate in the House Tax Committee, on which I serve.

One of the most important priorities addressed in the bill pays back the $854 million owed to schools due to the record borrowing by the GOP-controlled legislature last session.  I was firmly opposed to this borrowing and believe that paying back the schools in full is a necessary part of the budget.

The $854 million school shift is paid back through a temporary income tax surcharge on the wealthiest 0.5% of Minnesotans, or those with taxable income over $500,000 per joint filers.  The bill also closes the $627 million budget deficit and provides a structurally balanced budget into the future without gimmicks, shifts or deficits.  Paying off the state’s credit card is important if we want our state to be economically competitive.

In addition to paying back our schools and closing the budget deficit, the tax bill provides $270 million in middle class property tax relief.  The plan includes a new Homestead Credit Refund, retooled renters’ credit and increased funds to cities and counties to provide tax relief to nearly 1 million Minnesotans.  380,000 homeowners and renters throughout the state will receive a refund increase, with the average homeowner in Ramsey County receiving a refund increase of $228 and the average renter receiving an increase of $158.

The bill also provides tax relief for Minnesota businesses and veterans.  The tax bill includes an affiliate nexus provision to level the playing field between Minnesota’s bricks and mortar retailers and online retailers, simplifies taxpaying with an upfront exemption for capital equipment, improves the Angel Investor Tax Credit and the Historic Credit and conforms to federal laws to make filing taxes more streamlined for businesses.  The bill provides tax relief to veterans by creating a veterans jobs tax credit for Minnesota businesses and expanding the income tax credit for veterans.

There are three main revenue components to the House Omnibus Tax bill used to balance the budget and fund state responsibilities.  These components ask the wealthiest 1.1% of Minnesotans to pay their fair share, close corporate loopholes and recover state costs from tobacco and alcohol consumption.

The tax bill raises the income tax rate to 8.49% on the wealthiest 1.1% of individuals (taxable income greater than $400,000 per year for joint filers).  This group currently pays a smaller percentage in income taxes than low-and middle-income earners and the state hasn’t raised the income tax since 1991.  Only 3.3% of businesses will be affected by this increase.

The bill also eliminates corporate loopholes that allow corporations to shelter profits overseas and eliminates other subsidies that are outdated, ineffective, or that the state can no longer afford.  Under the bill, user-based fees on cigarettes and alcohol are also raised to offset state costs to health and human services and public safety programs.  The state spends billions annually on alcohol and cigarette related costs.

The tax bill will now be sent to conference committee, where the House and Senate bills will be negotiated into a final proposal.  The Senate’s tax bill is vastly different from the House version, and I will be advocating for the House priorities of paying back our schools and raising revenue in the most responsible ways possible.

­Town Hall Meeting

Please join Senator John Marty and me for a town hall meeting this Saturday, April 27, at 1:00pm at the McDonough Rec Center (1544 Timberlake Rd, St. Paul, MN, 55117).  We will be discussing a variety of legislative issues.

If you’re unable to attend, please contact me directly with your questions, comments and concerns.  You can reach me by phone at (651) 296-4224 or by email at rep.john.lesch@house.mn. You can also follow me on Twitter at @johnlesch.

Sincerely, 


John Lesch 
State Representative 
District 66B