Republican House leaders say the $2 billion tax cut proposal they unveiled Monday will lower taxes for more than two million Minnesotans. The package would use up virtually all of the state's projected $2 billion budget surplus, which DFLers would like to use to increase funding for education and other programs.
The main feature of the GOP tax bill is a one-time personal or dependent exemption, which supporters said could save a middle-class family of four $500 over the next two years, the Star Tribune reports. The exemption would cost the state $539 million over two years, according to the newspaper.
"Over 75 percent of this bill is targeted to the middle class and actual Minnesotans, not corporations," said House Taxes Committee chair Rep. Greg Davids, R-Preston, at a Monday morning news conference.
But another big chunk of money would go toward tax cuts for businesses, according to MPR News. It would begin phasing out the statewide property tax, which is paid by businesses and corporations, at a cost of $450 million over two years.
DFL leaders were quick to criticize the Republican tax proposal, saying it would provide billions in tax breaks to businesses over the long term and the loss in revenue from that change will grow over time.
"These tax cuts are incredibly short-sighted," said House Minority Leader Paul Thissen, DFL-Minneapolis in a statement. "Not only would our schools and students be shortchanged this year, they would likely pay the price down the road because the Republican plan is a recipe for budget deficits in the future."
The bill also includes a variety of smaller tax breaks for things like Social Security income, college loans and farm property. And it would raise the threshold for estate taxes, MPR News reports. It would also cut local government aid by $85 million to Minneapolis, St. Paul and Duluth, a move that was roundly criticized by those cities' leaders.
The bill is expected to be debated in the House tax committee Wednesday.
On the Senate side, DFL leaders are preparing their own smaller tax proposal - $460 million - which would focus on property tax relief and tax breaks that would help veterans find employment, according to MPR News.
You can see the entire bill here.