Dayton warns tax deduction loss would hurt state

Gov. Mark Dayton says Minnesota would be disproportionately harmed by the elimination of a key federal tax deduction. Tim Pugmire|MPR News

DFL Gov. Mark Dayton is criticizing the proposal from President Donald Trump and Congressional Republicans to eliminate a key tax deduction.

Dayton said Monday that the repeal of the state and local tax deduction is “one of the most offensive proposals” in the GOP plan. His administration estimates the deduction currently benefits 900,000 Minnesotans at a total of $1.2 $12 billion per year.

Dayton said Minnesota would take a disproportionate hit.

“Minnesota is the ninth highest beneficiary of this deduction. It’s one of the relatively few that benefits Minnesota more than most other states,” Dayton said. “What they’re going to do is take that away and shift it all over to an increase in the standard deduction, which goes across the country, which benefits everyone equally.”

Dayton is urging the president and congress to abandon the proposed repeal as well as other aspects of the plan that he views as “extremely regressive.” He said the focus of federal tax cuts should be on low and middle income people, not the rich.

“The way to get more economic growth is what we’re doing here in Minnesota: invest in education, invest in infrastructure improvements, do the things that are going to benefit everybody in this country, not just the favored few,” Dayton said.

Beth Kadoun, vice president for tax and fiscal policy at the Minnesota Chamber of Commerce, said Dayton’s analysis was faulty because it focused on just one proposed change. Kadoun said the full impact won’t be known until the complete GOP proposal is released.

“If you’re going to analyze the proposal, you need to take into account all the changes that they’re talking about at the federal level,” Kadoun said.

  • taxdetector

    “Minnesota is the ninth highest beneficiary of this deduction. It’s one of the relatively few that benefits Minnesota more than most other states,” Dayton said.

    Hmmm…Is that because MN has higher taxes than most other states?

    • Margaret Koop

      States with higher state taxes have become donor states to lower-taxed states and don’t get back what they contribute to the federal government.

      • taxdetector

        Easy to solve. Lower the taxes.

        • Margaret Koop

          Not so easy. Implodes. We’ve seen it before. Trickle down does not work.

          • taxdetector

            When?