As the deadline for passing a state budget approaches, Minnesota lawmakers have yet to find a way to rectify a $4.6 billion overspending problem. The House and Senate recently passed two contrasting Tax Omnibus Bills that will dramatically raise taxes on small businesses, residents, homeowners, low-income individuals, and consumers.
Senate Bill 2074 would raise every single income tax bracket with the top income tax rate moving to 9.25%. This $2.2 billion tax hike would give Minnesota residents and small businesses the 4th highest tax rate in the nation.
House Bill 2323 raises the top income tax rate for individuals and businesses to 9%, but unlike the Senate bill, leaves other rates untouched. However, the House bill also contains a number of targeted tax increases including a 54-cent per pack cigarette tax, a 50% increase on distilled spirits, a similar tax hike on beer and wine, taxes on digital products, and elimination of a number of tax deductions for mortgages, property taxes, and charitable contributions. All together, taxes would go up by $1.5 billion.
Meanwhile, as the conference committee began working out the differences between the bills, Governor Tim Pawlenty (R), a signer of the Taxpayer Protection Pledge, has given a clear veto threat of any tax increase passed by the legislature. The standoff was made even more interesting after thousands of Minnesotans held yet another tax rally on the steps of the State Capitol earlier this week, where Pawlenty joined the stage with other presenters.
Click here for ATR’s recent letter to the Tax Omnibus Conference Committee opposing both deleterious plans to drastically raise taxes in Minnesota.
(photo by theakshay)