We are nearing the final month of the 2021 session and work on establishing a new two-year state budget is about to get serious.
The House and Senate majorities and the governor all have put forward budget proposals and it is time to bridge gaps and find agreement before the Legislature’s May 17 date to adjourn. This work will take place with the backdrop of Minnesota’s $1.6 billion surplus – which is a $4.2 billion surplus when federal relief dollars are taken into account – and overflowing state reserves.
It maybe comes as no surprise that disparities in tax proposals appear to be the largest divides to conquer. House Democrats are looking to raise taxes and fees by more than $2.5 billion in just their tax bill ($1 billion) and transportation bill ($1.5 billion over four years) alone.
Notably, the House Democrat tax increases include several proposals that did not receive a single committee hearing and have not even been mentioned during the first two-thirds of this session. This includes a gas tax increase ($363 million over four years) by linking Minnesota’s gas tax to the Highway Construction Cost Index. This would result in an automatic annual gas tax increase. It also features a half-percent increase in the metro sales tax to fund light rail and other transit ($916 million over four years).
On top of that, House Democrats propose a motor vehicle sales tax increase ($120 million over four years) and a registration tax increase ($149 million over four years) through changes to vehicle depreciation schedules.
While “tax the rich” has been a mantra often repeated by Democrats in St. Paul, these tax increases would hit middle- and lower-income earners at a time tax increases of any kind are unnecessary.
The House Democrat tax increases also include a new fifth-tier income tax of 11.15 percent, which would give Minnesota the second-highest top income tax rate in the country. This would be detrimental to job and wage growth in Minnesota and put our border communities at an even further disadvantage compared with surrounding states.
House Democrats also propose capping relief from state taxes on federal Paycheck Protection Program loans, meaning many businesses will still be taxed on forgiven PPP loans that were used to pay employees and keep their doors open during a difficult year.
It is concerning the House majority would show such little restraint or respect for the taxpayers of Minnesota by looking to take another $2.5 billion of their hard-earned dollars, especially at a time many are struggling to regain their financial footing and the state is flush with cash.
I oppose these tax increases and will be working with my Senate Republican colleagues to protect Minnesota taxpayers.