Fiscal cliff: Report says Minnesota among double whammy states

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Lawmakers in Congress are scrambling to hammer out a deal that would avoid plunging the nation over a fiscal cliff – automatic tax-law changes that would be triggered in January.

But there is worse news for Minnesota and at least two dozen other states where scheduled federal tax increases could trigger higher state tax liabilities, the Star Tribune reports. The net effect is that in some cases taxpayers could pay more in both federal and state taxes if Congress fails to reach a deal by Dec. 31, the newspaper reports.

"The last thing Minnesota families need in these tough economic times is an increased tax burden at both the state and federal level," Rep. Michele Bachmann, R-Minn., the Star Tribune reports.

The findings were part of a Pew Charitable Trusts report released Thursday about the links between the federal fiscal cliff and the effect it would have on states.

If lawmakers don't strike a deal, the economy would be hit so hard that it would likely sink into recession in the first half of 2013, economists say, the Associated Press reports. Nearly everyone would feel the effects, the AP says.

The AP notes that middle-income families would pay an average $2,000 more next year, the nonpartisan Tax Policy Center has calculated.

Minnesota lawmakers say they are working hard with congressional colleagues to pull the nation back from the fiscal cliff, KSTP reports:

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Minnesota lawmakers squabble over looming 'fiscal cliff'

It's only July, but Minnesota lawmakers in Congress are fretting over January – and not because of winter. Some observers say the nation's federal budget is headed for a "fiscal cliff." Without congressional action, on Jan. 1 Bush-era tax cuts are set to expire and $109 billion in automatic federal spending cuts will be set in motion. A partisan rift has split the state's lawmakers as they debate what Congress ought to do about it.