On Monday, April 17, Minnesota Senate Republicans held a press conference in the Senate Tax Committee room to highlight billions of dollars in proposed tax hikes from Democrats. The omnibus budget bills and additional fees and policy provisions in other budget bills mean $13 billion is not the maximum that taxpayers could be on the hook for. The Senators warned that future Senate tax hearings would certainly be an eye-opening experience for taxpayers.
“Minnesota serves as one of the highest taxed states in the nation,” said Senator Gary Dahms (R − Redwood Falls). “With an historic $17.5 billion surplus, there is every reason to provide equally historic tax cuts this year. The tax plan proposed by our Republican caucus achieves that and helps families struggling to afford everyday essentials.”
Senate Republicans proposed their own tax ideas last month that would cut taxes by 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 credits. It includes the full elimination of the Social Security tax cut, a 1% tax cut on the lowest two income tax rates, property tax relief, rebate checks to every taxpayer, and a child tax credit for families.
Despite Democrat campaign 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.
Some bills containing tax increases include:
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.
Senate Republicans highlighted how the cost of Paid Family Medical Leave (PFML) alone could be a $60 million tax increase to school districts: $30 paid by school districts as employers and $30 million paid by teachers and school staff. The fiscal analysis on the cost of PFML to local governments has not yet been completed.
The legislature must pass a balanced budget for Governor Tim Walz to sign before session ends May 22.