Minnesota House of Representatives
Public Information Services


Public Information Services Menu

Tax bill is on its way to the governor

By Lee Ann Schutz

A $432 million tax bill that would conform the state’s tax code to several federal provisions and repeal three business-to-business taxes was re-passed overwhelmingly off the House floor 126-2 on Friday. Earlier in the day the Senate passed the bill 58-5. It now moves to Gov. Mark Dayton for action. He said during a press briefing today that he would sign the measure as soon as it reaches his desk.

Rep. Ann Lenczewski speaks on the House floor March 21 during debate on re-passage of a tax bill. Photo by Andrew VonBank

“This is really a compromise among the three bodies on what we can get done here today,” said Rep. Ann Lenczewski (DFL-Bloomington), who sponsors HF1777 with Sen. Rod Skoe (DFL-Clearbrook). “We all don’t agree on everything, but all four caucuses and the governor have found a way to come together for middle-class tax relief.”

Republicans called the bill, and its repeal of business taxes, an acknowledgement that last year’s tax increases were a mistake.

Rep. Mike Benson (R-Rochester), calling for more tax cuts this session, likened the bill to a game with two halves. “In the first half, the home team got slaughtered with a $2.4 billion tax increase. We are starting the second half, and the home team is rallying here but has a long way to go.” 

“I hope this House has learned its lesson. Never again will a business-to-business tax darken this door,” said Rep. Greg Davids (R-Preston).

The bill, as amended Thursday in the Senate Taxes Committee, would lower the amount put forward in the initial House proposal by about $71 million to approximately $432 million for the 2014-2015 biennium. The governor’s tax proposal (HF3122) comes in at $615.56 million in reductions over the biennium.

As proposed by the Senate, the savings would come largely from delaying repeal until March 31, 2014, of two business-to-business taxes enacted July 1, 2013. The House had opted to make the repeal retroactive to July 1, 2013, and allow for a refund mechanism. The warehouse sales tax was set to take effect April 1, 2014, but that, too, would be repealed.

The bill would push back the effective date for an upfront sales tax exemption for capital equipment purchases after June 30, 2015.

The bill would also extend the Angel Investment Tax Credit, which was set to sunset this calendar year. For 2014 the allocation would increase from $12 million to $15 million. The credit would be available in that amount for 2015 and 2016.

Other differences accepted by the House include:

·         A $150 million onetime transfer on July 1, 2014, from the General Fund to the budget reserve;

·         repeal of the gift tax section of law retroactive for gifts made after June 30, 2013; and

·         adjustments to the estate tax by removing language allowing an exclusion for qualified small business and farm property.

Conforming to the federal tax code

Both bodies pressed hard for the state to conform to the federal tax code. However, while increasing the married standard deduction, it would be delayed until tax year 2014.

Other conformity provisions in the bill include increased income limits and an unlimited time for the deduction of student loan interest and increased maximum exclusion for employer-provided adoption assistance.

Several deductions are extended through tax year 2013 only. They include:

·  a higher education tuition expense deduction;

·  itemized deduction for mortgage insurance premiums;

·  an option for taxpayers to claim an itemized deduction for sales taxes rather than income taxes paid; and

·  authority for people age 70½ or older to transfer up to $100,000 from a traditional IRA or Roth IRA to a qualified charity.

The bill would provide a $1 million one-time appropriation to the Revenue Department for the cost of implementing the tax code changes.

Rep. Jenifer Loon (R-Eden Prairie) acknowledged people may have to re-file their taxes because of inaction or delay by the government. “The last thing we want to do is have people incur more expenses to file their taxes because their government did not act in a timely manner.”

Lenczewski noted that the Department of Revenue has said it may be able to automatically adjust for the changes of returns that have been filed.

Watch a full video archive of Friday's floor session here

Search Session Daily

Priority Dailies

Session is over — Session Daily will be there when news from the House warrants

The regular 2015 legislative session concluded May 18, and the 2016 session is scheduled to conve...

Recent Dailies

Lawmakers air concerns over changes to concurrent enrollment standards

A joint House and Senate higher education panel on Thursday aired concerns over changes to nation...

Sports facilities commission updated on stadium progress

The stadium that will house the Minnesota Vikings was the only item discussed during a Wednesday ...

Prison population exceeds facility capacity, working group learns

The state’s prison population currently exceeds facility capacity. That provided myriad ideas fro...

Child protection task force updated on work of agency, counties

A legislative task force tasked with overseeing efforts to overhaul the state’s child protection ...

Data practices commission sets work plan for coming months

The Legislative Commission on Data Practices met for the first time in nearly nine months Thursda...

Rep. Norton announces she won't seek re-election in 2016

Rep. Kim Norton (DFL-Rochester) announced Thursday that she will not seek re-election in 2016. ...

Avian flu crisis over for now, but producers fear its return

The Legislature appropriated several million dollars during the 2015 session to help combat last ...

Publicly funded preschool favored by majority of fair polltakers

A majority of those participating in the nonpartisan House Public Information Services state fair...

The House heads to the Great Minnesota Get-Together

Fairgoers can meet legislators and weigh in on hot political topics during their visit to the Hou...

Special election to be held Dec. 8 in District 3A

A special election has been called for Dec. 8 to fill the District 3A seat in the Minnesota House...

Public Information Services  ·   175 State Office Building, Saint Paul, MN 55155   ·   Public.Information@house.mn