Senate passes plan to sync state taxes with feds; Republicans, Dayton have until May 21 to hash out plans

Published 8:44 am Friday, May 4, 2018

ST. PAUL — The Minnesota Senate on Thursday passed its plan to sync Minnesota’s taxes with the federal government while modestly cutting income tax rates, the final piece of a three-way debate over taxes at the Capitol this year.

Taxes are at the forefront at the Legislature this year. While the federal tax overhaul cut taxes for many across the nation, high-tax states like Minnesota are grappling with avoiding potential tax increases for hundreds of thousands of residents. Split control of Minnesota government, with a Republican Legislature and Democratic Gov. Mark Dayton, has made the logistical challenge a political struggle, too.

The Senate bill would cut tax rates on the first income bracket from 5.35 percent to 5.1 percent, benefiting nearly all taxpayers because it applies to the first $26,000 of income for a single earner. The bill also sought to preserve many popular tax deductions, like on tuition expenses, and would automatically trigger future tax cuts when the state boasts a budget surplus.

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It passed on a 34-32 vote, over Democratic objections that it should have benefited middle-class taxpayers more.

“If we do nothing, tax returns and filing for citizens of this state become very difficult,” said Republican Sen. Roger Chamberlain, the Senate’s Taxes Committee chairman. “There really is no option; we have to get this done.”

Earlier this week the House approved its own plan, which called for a similar, modest tax cut on higher earners than the Senate plan while boosting the state’s standard deduction by $1,000 for a married couple. But passage in the Legislature was just the first — and easiest — step.

Republican legislative leaders and Dayton have just over two weeks to hash out their markedly different tax plans. The Legislature will adjourn May 21.