The Minnesota Senate has passed legislation to align the state tax code to recent federal changes.
Lawmakers voted 66-0 Thursday, sending the bill to Gov. Dayton. The House passed the bill unanimously last week.
It would provide $21 million in tax relief to an estimated 220,000 Minnesotans. Lawmakers and state officials wanted quick action this session to have the changes in place by the start of the tax filing season on Jan. 23.
The bill is the first phase of relief and reform planned this session, according to Sen. Roger Chamberlain, R-Lino Lakes, who chairs the Senate tax committee.
“What this would essentially do is conform with federal tax law,” Chamberlain said. “So, we will smooth out the filing process for a lot of Minnesotans, avoid the hassles of a lot of paperwork and start to issue tax reforms for a lot of Minnesotans.”
Senate Democrats tried unsuccessfully to add more tax cuts to the bill, including the tax bill that Gov. Dayton vetoed last spring.
"This is our chance to get tax relief," said Senate Minority Leader Tom Bakk, DFL-Cook.
Meanwhile, the House tax committee has begun looking at legislation to adjust the state estate tax, including a proposal to eliminate it.
Current state law exempts estates that are valued at less than $1.8 million. The exemption is set to rise to $2 million next year.
Rep. Joe McDonald, R-Delano, the repeal bill’s chief author, said he knows people who lost a family farm due to the tax. He knows others who moved out of state to avoid it, he said.
“They could put up with the cold. They’re not wussies. We here in Minnesota are pretty tough,” McDonald said. “They moved out because they can save their families and their generations of families a lot of money from the government extracting through coercion and taking it from the death tax.”
House Tax Chair Greg Davids, R-Preston, said he think the estate tax is "an evil tax."
"My gosh, we tax you while you're living, isn't that enough?" Davids said. "Now you're dead, and we hit you again. That's just not very Minnesota nice."
The committee is also considering two bills that would increase the estate tax exemption level. One would set the trigger at $5 million. The other would set it at $5.49 million by aligning the law with federal tax code.
But Rep. Diane Loeffler, DFL-Minneapolis, said it would take tens of millions of dollars to substantially cut the tax and raised concerns about the budget implications of losing estate tax revenue.
"I'm still struggling with the priority of such a small group getting such a big benefit." Loeffler said.
Last week, Gov. Dayton proposed a $300 million package of tax cuts that he wants passed this session. His plan includes tax breaks for farmers, college students, low income families and parents paying for child care.
Republicans have said their plan will be bigger.
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