Gov’s tax bill gets taxing hearing

The time allotted for the House Taxes Committee’s deliberation of Gov. Mark Dayton’s tax proposals was only long enough to get through three of the 42 testifiers ready to weigh in.

Sometimes contentious, with one audience member having to be removed because of continued outbursts, the April 13 meeting showcased the policy push-pull between Dayton and his proposed income tax increases and the Republicans’ stand that new taxes would not be part of the fix to solve the state’s $5.1 billion deficit.

Sponsored by Rep. Michael Paymar (DFL-St. Paul), HF1231 lays out the governor’s new 10.95 percent tax rate on the state’s highest income earners; a new state property tax on homes and seasonal recreation property valued at more than $1 million; increased income subject to corporate tax; and various other tax and sales tax provisions.

Committee Chairman Greg Davids (R-Preston) held the bill over for further discussion sometime after Easter. However, with the House and Senate discussing their tax positions in conference committee, it is likely the governor’s proposals will be part of the mix.

“We all recognize that we have to make some painful cuts, and we are prepared to work with you in a fair and balanced way that does not harm our state,” Paymar said. He referenced the omnibus finance bills passed by the House and Senate and a recent analysis by Minnesota Management & Budget and the Department of Revenue showing the bills out of balance by $1.2 billion in the House and $1.16 billion in the Senate. He said the Republican approach “doesn’t get the job done.”

Revenue Commissioner Myron Frans described the governor’s position as a balanced approach. “It is the governor’s belief that we need to provide increased revenue, over time, to deal with the fact that we do not generate enough revenue on a yearly basis to fund the level of government the citizens of Minnesota have come to expect.”

“The governor’s proposal expands state government by 22 percent,” said Rep. Steve Gottwalt (R-St. Cloud). He said that income tax revenue is “unstable,” and questioned adding revenue at a time when businesses and individuals are experiencing flat revenue. “I don’t find that balanced or responsible.”

Rep. Sarah Anderson (R-Plymouth) questioned Frans’ contention that the governor’s proposal would make Minnesota more competitive. “In reality, he is making Minnesota one of the highest taxed states in the nation,” she said.

The bill’s companion, SF925, sponsored by Sen. John Marty (DFL-Roseville), awaits action by the Senate Taxes Committee.