WATCH: Senate Republicans present the Taxing Truth about the DFL plan
ST. PAUL – Today Senate Republicans highlighted nearly $10 billion in proposed tax hikes from Democrats, despite the $17.5 billion surplus. Using just six bills proposed by the House, Senate and/or Governor Walz, each bill has the support of one of the all-Democrat-controlled bodies of state government, giving it a good chance to stay alive as Republicans are shut out of the negotiations.
“$9.66 billion in tax hikes is shocking and tone-deaf at a time when Minnesotans are struggling to afford daily life,” Senator Rich Draheim (R-Madison Lake) said. “Families are already being squeezed by inflation and a potential recession; these tax increases are going to crush them. It is mean-spirited and heartless. We should be looking at ways to give the surplus back to Minnesotans, not take even more from them.”
Cities and Counties are required to hold their own Truth in Taxation hearings before setting their budgets and preparing tax increases on their constituents. Next year’s hearings might be very surprising as local government and school boards have testified the mandates and policies being passed in St. Paul will have an impact on local budgets across the state.
With the election putting Democrats in full control of government without a check from Republicans, Democrats have drastically expanded the agenda they ran on last year. Despite promises to end the tax on Social Security and return the surplus, the session has seen very little tax relief and no effort to return the surplus with rebates or tax cuts. Despite bipartisan support on a procedural vote in the Senate, a full elimination of the Social Security tax seems to be stalled without the political will by four freshman Democrats who have yet to make good on their campaign promise.
Senate Republicans proposed their own tax ideas last month that would cut taxes by much more than the dollar amount Democrats want to raise taxes. The Republican “Give it Back” plan cut taxes for Minnesotans by $13 billion with a mix of permanent tax relief, one-time rebate checks, and short-term tax credit. It includes the full elimination of the Social Security tax, a 1% tax cut on both the lowest two income tax rates, property tax relief, rebate checks to every taxpayer, and a child tax credit for families.
TAX INCREASE DETAILS
The six bills considered add up to $9.69 billion in higher taxes and fees. There are additional fees in other budget bills and policy provisions, meaning $13 billion is not the maximum that taxpayers could be on the hook for- it will likely be more.
The six bills the Republicans used for their assessment are:
Transportation Budget Bill: $3.56 billion in tax and fee increases including:
- Motor Vehicle Registration Tax increase of $736 million over four years
- Motor Vehicle Sales Tax increase of $2214 million over four years
- Retail Delivery Fee (remains alive in the House) of $512 million from FY ‘25-27
Source: Dept of Revenue Analysis on H.F. 2887, April 4, 2023
Housing Bill: $744 million from the Metro Sales Tax (remains alive in the House)
Source: Dept of Revenue Analysis on H.F. 2335, April 3, 2023
Paid Family Medical Leave: $2.9 billion tax increase on every employee and business in the state. Using the most recent non-partisan Senate Fiscal Note, the bill includes a .07% payroll tax to cover benefits beginning in 2025 and takes $1.7 billion from the surplus this year as starter cash.
Source: Non-partisan Senate Fiscal Analysis of H.F. 2, April 13, 2023
5th Tier Income Tax: $1 billion increase with new fifth tier tax; Gov. Dayton added the fourth tier tax level just 10 years ago.
- If enacted, this would have an impact on this year’s taxes due tomorrow for more than 24,000 returns with an average increase in tax of $9,231 per return
Source: Dept. of Revenue Analysis of H.F. 442, April 10, 2023
Corporate Franchise Tax: $1.169 billion increase on businesses simply for the “pleasure” of doing business in Minnesota.
Source: Dept. of Revenue Analysis HF 2883, April 10, 2023
Cannabis: $269 million in fees and taxes on legal cannabis
Source: Dept. of Revenue Analysis of HF 100/SF 73, March 31, 2023