ST. PAUL – State Rep. Lisa Demuth, R-Cold Spring, said she opposes the basic premise of an omnibus tax bill the House majority approved on Thursday because it raises taxes by more than $1 billion amid a historic state surplus.
“We had a lengthy discussion on this bill and it is clear both sides of the aisle have strong positions on taxes,” Demuth said. “For me, it all comes back to the point that we should not raise taxes as we continue to recover from the pandemic and have a historic state budget surplus. People have suffered enough setbacks during the last year. This is a time our state should be fostering financial recovery for families and businesses alike so they can get back on solid footing. I am concerned raising taxes by $1 billion would be detrimental to that mission.”
Demuth said the House majority’s tax package would create a new income tax tier and give Minnesota the second-highest income tax rate in the country, directly impacting many workers that have been hit hard during the pandemic.
In addition, Demuth said some business owners would suffer from a cap the bill places on emergency Paycheck Protection Program (PPP) loans they received from the federal government to help pay for employee wages or rent. Congress made these loans free from federal taxation, but not all Minnesota business owners would see the same forgiveness under the House’s tax package.
“This PPP issue, to me, is rooted in principle,” Demuth said. “The government should not stand to gain financially from the hardships people in this state have endured. For Minnesota to collect a single dime from these emergency loans would really be a bad look for our state and this situation needs to be fixed. End of story.”
Demuth said she remains optimistic significant improvements will be made on the bill (H.F. 991) as a conference committee works iron out differences between House and Senate tax proposals.
“We should expect the tax bill and other omnibus budget packages to look substantially different by the time they come back around for votes on final passage,” Demuth said. “Issues related to taxes do appear to be among the largest gaps to close between what the House and Senate propose. Not only does the House majority propose a $1 billion increase in its tax bill, but there is another $1.6 billion increase to taxes and fees over the next four years in its transportation plan. The Senate’s proposal is much more reflective of the times we are in and I support their position, in general.”