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Bill aims to help lower income earners

Published (3/18/2011)
By Lee Ann Schutz
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The House Taxes Committee got its first look March 14 at the taxes portion of its omnibus bill (HF42), which over fiscal years 2012 and 2013 anticipates a $2.96 billion General Fund reduction, and would provide breaks to those in the lower to middle tax brackets. However, with more testimony to come yet this week and the need to roll in the property tax and local tax division provisions, a lot could change before the committee acts on the bill, most likely March 19.

Sponsored by Committee Chairman Greg Davids (R-Preston), the bill would reduce the rate those in the lower and middle brackets pay. Income taxpayers in the 5.35 percent bracket would see a 0.20 percent reduction over the biennium. Those in the 7.05 percent bracket would drop to 6.85 percent in 2012, but would not experience a reduction in 2013. The cost over the biennium would be $221.3 million to the General Fund.

In response to the proposal, Gov. Mark Dayton said the bill would benefit higher income earners. According to information prepared by the Department of Revenue, a taxpayer with an income between $30,000 and $49,999 would see a tax cut of $26 in 2012, while those with a federally adjusted gross income of $250,000 to $499,999 would see a cut of $206.

Also of note, the bill:

• calls for $7 million over the 2012-2013 fiscal biennium to establish a new Minnesota Science and Technology Fund to help funnel dollars to research and development programs through grants and a possible commercialized research program;

• would reduce the state general levy for commercial industrial property by

$49.9 million over the next biennium;

• would eliminate sales tax paid by communities for water used for public safety and the tax paid by consumers on ringtones; and

• would move to reinstate a reciprocity agreement with Wisconsin for those working in one state and living in the other.

Approximately $18.2 million is expected to be generated over the biennium by adding to the tobacco definition “moist snuff,” also known as dipping tobacco. The bill provides a separate tobacco products excise tax for moist snuff equal to $1.45 per ounce. There would also be $18.5 million over the biennium to the General Fund from federal tax conformity for tax year 2010 only.

The companion, SF27, sponsored by Sen. Julianne Ortman (R-Chanhassen), has been laid over by the Senate Taxes Committee for possible omnibus bill inclusion.

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