On Thursday, May 3, Senator Mary Kiffmeyer (R-Big Lake) voted in support of a comprehensive tax plan that will cut income tax rates for the majority of Minnesotans. The legislation also brings the state’s tax code into conformity with the federal tax overhaul and protects virtually all Minnesotans from a tax increase.

Without this tax bill, Minnesotans would see a nearly $500 mil tax increase. Since the state budget is covered, critical needs are addressed and the budget reserve is funded there is no need for more revenue.

“Today, Senate Republicans worked together to pass compressive tax reform that will serve as a roadmap to Minnesota’s economic future,” said Sen. Mary Kiffmeyer. “The bill passed today focuses on our number one priority, you, Minnesota’s taxpayers. The legislation stands out because it allows us to protect the wages of 99.9% of Minnesotans and gives 82% an actual tax break. The Governor can’t say that about his proposal since his plan would raise taxes on every single tax bracket. That’s absurd, and even more so when you consider our taxes compared to our neighboring states. While our plan won’t correct all of Minnesota’s high-tax disparity it certainly starts moving the needle towards reform that will.”

The Senate’s tax plan will:

• Minnesota income taxes for 82% of working families and prevent a tax increase for 99.9% percent of the state.
• Drop the bottom tax rate a quarter of a percent, from 5.35% to 5.1% beginning in tax year 2018.
• Preserve the state personal and dependent exemption of $4,150 and the state standard deduction of $13,000.
• Protect popular deductions for mortgage interest, state and local taxes, home equity loan interest, and charitable donations.
• Extend the $5 million angel investor tax credit to help tech-focused startups.

• Encourage Main Street business and agriculture investment by conforming fully to Section 179 of the IRS tax code, allowing an immediate deduction of the entire cost of equipment.
• Gives Minnesotans more control over our tax code by separating the state tax code from the federal tax code – also known as the FAGI model.

Unlike Governor Dayton’s plan, the Senate Republican proposal does not reinstate the 2% sick tax on health care services, which the Department of Revenue called “regressive” after estimating it will increase taxes on Minnesotans at every single income grouping.

The bill also includes a major reform designed to protect future taxpayers from sending too much of their paychecks to St. Paul. When the November forecast projects a significant surplus, individual income tax rates will be automatically reduced one-tenth of one percent beginning in the next calendar year. If a healthy budget surplus continues in subsequent years, reductions could build each year until rates have been reduced by one percentage point.

Sen. Kiffmeyer continued,“If taxpayers have overpaid and the budget plus reserves are addressed, the extra revenue should go back to taxpayers by reducing rates.”