Senate Democrats released their tax bill this morning.
It would create a new third tier income tax rate of 9.4 percent on on joint filers with a taxable income $140,960 or more a year. Single filers would pay the new 9.4 percent rate starting at a taxable income of $79,730.
Sen. Rod Skoe, DFL-Clearbrook, who chairs the Senate Tax Committee, says the funding will help erase the state’s budget deficit and commit more money to education.
“When this provision becomes law, we will accomplish the main goal of this session and that’s to balance the budget for the next four years,” Skoe said.
The plan does not create the four tier income tax rate that is being proposed by House Democrats and Gov. Dayton. Dayton wants to raise income tax rates to 9.85 percent on the top 2 percent of filers. House Democrats are proposing a fourth tier of 8.49 percent on joint filers who have a taxable income of $400,000 or more. They also want to create a temporary 4 percent surcharge on filers who earn $500,000 and more.
Sen. Julianne Ortman, R-Chanhassen, criticized the income tax hikes in the plan. She said the plan goes well beyond Gov. Dayton’s plan.
“To the extent that there was an effort to tax the rich, I think this is not it. This is a failure,” Ortman said. “I think at a $140,000 – these are middle class, hardworking Minnesotans and not representative of the rich.”
The Senate tax plan would also increase the tobacco tax by 94 cents a pack. It would expand the state sales tax to consumer services and clothing but lower the overall sales tax rate. The bill also includes state funding to help Rochester deal with a proposed expansion by the Mayo Clinic; it authorizes tax breaks for the Mall of America expansion and tax breaks to help lure a biotech company to expand in Brooklyn Park.
The Senate Tax Committee debated the bill this morning. Skoe said he wants the committee to vote on the bill by Thursday.
The House is scheduled to vote on its tax bill on Wednesday.