Senate Republicans propose $900M tax cut

Republicans in the Minnesota Senate are proposing $900 million in tax cuts that they say will help boost the state's economy. The plan, announced Thursday, is three times bigger than DFL Gov. Mark Dayton's tax proposal and includes the first cut to the lowest tax rate since 2000.

But Republican lawmakers were short on specifics, including how they plan to pay for the cuts.

They say their tax relief plan will benefit middle class families, senior citizens, business owners, farmers and college students.

The centerpiece is a permanent cut to the lowest income tax rate, which they estimate will benefit 81 percent of the state's taxpayers. It would target families making less than $135,000 a year.

Sen. Roger Chamberlain, R-Lino Lakes, the chair of the Senate tax committee, said there are "gobs of money pouring into the state coffers."

He's said Minnesotans haven't had a break in 17 years.

"We have spent years building stadiums and other things and giving handouts to a lot of people," he said. "It is time to give the money and some relief back to the workers in this state, the farmers, the small businesses."

The Senate plan would phase out the tax on Social Security income, make changes to the statewide business property tax, and provide tax credits to farmers paying school district levies and students paying off college loans.

Chamberlain said many of the details are still being worked out. He did not say how much of the $1.65 billion budget surplus would be used or how spending cuts in other budget areas might factor in.

Senate Republicans will release additional budget numbers on Friday.

Chamberlain stressed that the tax bill is being structured to advance Minnesota's economy.

"By stimulating the economy, businesses will start hiring people. People will be incented to go back to school. Businesses will partner with schools," he said. "When businesses are generating activity and people are spending, people get hired."

Democrats took notice of the lack of details.

Sen. Ann Rest, DFL-New Hope, said she wants to know more than what Republicans revealed about their tax plan. Rest is especially curious about the size of the income tax rate reduction.

"I will be interested to see how they accomplish that without giving that significant relief to millionaires," she said. Even if it's a lower percentage, it's a whole lot more money."

Dayton released his tax proposal back in January. The $300 million plan is a pared down version of the tax bill he vetoed last year due to a potentially expensive drafting error. Dayton is also targeting some relief to middle class families, college students and farmers.

The governor continues to warn about the long-range impact of overly generous tax cuts.

"We have worked so hard in the last six years to re-establish fiscal integrity and stability in Minnesota government," he said.

"We have a structural surplus now for the next two biennia following this one. I'm not going to walk out the door in January 2018 leaving my successor the kind of deficit situation that I encountered. I won't allow that to happen."

Republicans in the Minnesota House are also teeing up some big tax cuts and are expected to announce their proposed numbers for spending and tax cuts in the next few days.

House Speaker Kurt Daudt said the numbers will differ from the Senate, but the share a similar priority for tax relief.

"We have a surplus right now in our state budget, so our priority is going to be giving some of that surplus back to Minnesotans," said Daudt, a Republican. "It is a big priority for us, so I would expect people when they see our number see that that's a significant tax reform bill."