Minn. Senate votes to raise income taxes on highest-paid
The DFL-controlled Senate had already passed a tax bill and an education funding bill last week. But senators were back at the Capitol on Saturday debating both issues a second time.
DFL leaders tucked a new income tax plan in a new education bill that would provide families with money to enroll kids in early childhood programs. The basic school funding formula would grow by 2 percent each of the next two years, and more money would go to higher education with the hope of holding down college tuition costs.
Assistant Majority Leader Tarryl Clark of St. Cloud said the strategic investment of $444 million will keep the education system strong.
It is why jobs come here. It's why people come here. It's why we have the great quality of living. Without a strong educational foundation we wouldn't have the kind of life that we have here. So, it's fundamental to what we're doing here today to make sure that we're investing smartly and that we keep up being top in the nation," she said.
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But the bill would also ensure Minnesota a top-of-the-nation ranking for income taxes, by increasing the top rate from 7.85 percent to 9.7 percent. The new fourth-tier rate would apply for Minnesota couples with taxable earnings after deductions of more than $250,000. The new rate would kick in for single filers at $141,000. Only California, Vermont and Oregon have top rates of nine percent or higher.
Sen. Julianne Ortman, R-Chanhassen, wants nothing to do with a top tax ranking.
"The highest rate in the nation for the lowest salary rate in the nation," she said. "We're going to tax our citizens right out of a job, right out of supporting the government." The income tax increase has little chance of becoming law, because Gov. Pawlenty has repeatedly threatened to veto any tax hike that lands on his desk.
Still, Republicans like Sen. Bill Ingebrigtsen, R-Alexandria, don't like the message lawmakers are sending with the legislation.
"This huge income tax sends the wrong signal to the business sector," Ingebriftsen said. "These people are job creators, folks. They're job creators. Members, this is going to be a job killer."
Republicans aren't the only ones who don't like the tax increase. Seven DFLers, mostly from suburban swing districts, voted against the bill. Sen. Kathy Salzman, DFL-Woodbury, was among five first-term Democrats to side with Republicans. Salzamn says the vote was difficult because she believes a bigger investment is needed in education.
"But the bill went just a little too far for me in creating this fourth tax bracket," she said. "And I believe we need greater balance in this bill, and I will work with the tax chair over the next two months to ensure that our final bill is more balanced and moderate."
DFL leaders in the Minnesota House are also pushing an income tax increase. Their proposal would set a new top rate at 9 percent. Under the House plan, all of the new income tax revenue would be used to lower property taxes statewide.
