Accord reached on top-tier tax rate

By Lee Ann Schultz

ST. PAUL — Legislative leaders and Gov. Mark Dayton announced an agreement on how they want to raise the $2 billion in new revenue to balance the next biennial budget.

“This puts us in a very good place to end the session on time,” said House Speaker Paul Thissen, DFL-Minneapolis, during a press briefing Thursday night.

Although a new fourth-tier income tax rate on the state’s highest earners has been part of the mix since the start of budget negotiations, it has been unclear until Thursday what that rate would be — 9.85 percent. That is higher than the House’s original position of 8.84 percent and lower than the Senate’s proposal of 10.7 percent. The 2 percent surcharge on those taxpayers to pay off the money the state owes the schools has been dropped. Dayton said that money will be allocated this biennium toward a payment, and he expects to have the debt paid off during the next biennium.

While new taxes on alcohol have been dropped from the bill, cigarette smokers are likely to pay about $1.60 a pack more — a House position. Additionally, smokers could be subject to new taxes announced today to fill any funding shortfall to pay the state’s share of the stadium for the Minnesota Vikings.

While the taxes conference committee will be charged with closing some corporate loopholes, businesses could benefit from the upfront sales tax exemption on capital equipment.

There are no new consumer sales taxes being proposed (a Senate position), and the bill will eliminate sales tax payments for cities and counties. But three new business-to-business taxes have been retained. They include the provisions related to warehouses, electronic repairs and telecommunications.

Friday, the Tax Conference Committee is expected to finish work on the omnibus tax bill today, which is sponsored by Rep. Ann Lenczewski, DFL-Bloomington, and Sen. Rod Skoe, DFL-Clearbrook.

Lee Ann Schultz is a writer with the Minnesota House Information Service.

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