Senate Tax Chair targets tax expenditures

Republicans in the Minnesota Senate are taking aim at the large number of deductions in the state’s tax code as a way to help balance the state’s budget.

Senate Tax Chair Julianne Ortman of Chanhassen says she’s considering the deductions, also known as tax expenditures, as government spending. Ortman made her comments after the Department of Revenue released a report that detailed the billions of dollars in tax breaks that are currently in the state’s tax code. She says she’s going to start looking at it as a way to help balance the state’s budget deficit.

“People have wanted to say that this would be a tax increase to eliminate or cut one of these tax credits.” Ortman said. “This is new information for us. We’ve never had a commission like this who said “No, look at this as government spending.”

Ortman didn’t offer specifics as to what deductions she would target but she said those that are working will stay in law. For example, she said the mortgage interest deduction has helped spur home ownership in the state.

Governor Dayton and state lawmakers are grappling with balancing a projected budget deficit of $6.2 billion over the next two years.

This isn’t the first time lawmakers have targeted the state’s tax deductions. Democrats looked at closing some of the loopholes in 2009 and were criticized by special interest groups and Republicans who held the minority at the time.

Governor Dayton is proposing income tax hikes on Minnesota’s top earners to balance the budget. Republicans oppose that plan. When asked about Ortman’s plans, Dayton said he was pleased Republicans were looking at new revenue to help fix the state’s budget tap.

“I encourage them to look at every aspect,” Dayton said. “Whatever we can do to make taxes more fair and progressive is something that I support on principle. I’d have to know the details of what they’re going to do but again, I’m glad that they’re starting to recognize that we’re going to need some revenues in order to deal with this budget situation.”

You can read the Tax Expenditures report here.

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