We wrote earlier about the house tax bill process. As expected the House's tax language prevailed in sections that were different in the conference committee. But the Governor vetoed it. There isn't time left in the session to go back to square one, so will the Republicans give something up (like more school funding) and bang together a last-minute bill to try to get Dayton to sign at least a conformity bill?
The bill the governor vetoed was as Senate Chair Roger Chamberlin said, "modest."
- House original plan reduced the tax rate for people in the second lowest tax bracket, making between $25,891 and $85,060.
- The original Senate plan lowered the rate for those making less than $25,890.
- In the new version, people in both of the lowest two brackets will have a rate decrease.
- DOR commissioner Cynthia Bauerly said she thought it was an improvement, but it still didn’t have the expansion of the refundable “working family tax credit” which Dayton wants.
- The rate reductions would take place over two fiscal years so that the lower rates would be in place by 2020.
What it didn’t have:
- Didn’t have any Property Tax reform just some tweaks and specific case alterations.
- Did not have the triggered tax cuts in the event of a surplus as suggested by the Senate Version.
- Anything changing the estate tax threshold (Dayton wanted to roll back the changes from last year, Republicans wanted to conform or at least get closer to the federal level.)
- No reinstating of the Tobacco Tax accelerator like Dayton wanted.
Previously agreed on positions between the Senate, House, and Governor
- Full conformity with Section 179 Expensing. Previously, Minnesota had only a partial deduction for business expenses.
- Switching from Federal Taxable Income to FAGI Federal Adjusted Gross Income as a basis.
If they don’t get a tax bill signed
- Everybody would get tax increases because they would lose some of the federal deductions they previously took.
- Taxes would be hideously complicated because of the vast differences between the new tax changes at the federal level and how they no longer match up with Minnesota taxes.