Minnesota Senate GOP unveils massive $8.5B tax cut proposal

ST. PAUL, Minn. (AP) — Minnesota Senate Republicans on Thursday announced a tax cut proposal that would cost more than $8.5 billion over the next three years, which they say would make it the largest in the state’s history.

The proposal would reduce the lowest-tier income tax rate from 5.35% to 2.8%, which lawmakers say would lower taxes for all filers, and eliminate taxes on all Social Security benefits. It would use up roughly $3.5 billion of the state’s $7.7 billion projected surplus in the current and cut into the next two-year budget, differing from more short-term spending plans like a proposal from House Democrats for $1,500 bonus checks for frontline workers that passed off the floor on Thursday, and Democratic Gov Tim Walz’s proposal to send checks of $175 or $350 to more than 2.7 million Minnesota households.

“We are proposing permanent, ongoing tax relief so working Minnesotans have more money in their pockets every single paycheck week after week, month after month, year after year,” said Republican Senate Majority Leader Jeremy Miller, of Winona.

The proposal comes after the Senate passed a $2.73 billion proposal earlier this month to pay the state’s debt to the federal government for jobless aid during the pandemic and replenish the unemployment insurance trust fund to avoid automatic payroll tax increases for businesses after a March 15 deadline.

The Senate GOP proposal matches Democratic Gov. Tim Walz’s proposed number, but House Democrats have suggested pairing the measure with the bonus checks proposal for frontline workers, which stalled when lawmakers couldn’t agree on how to parcel out during a special panel formed last year.

Senate Democrats called the tax legislation “premature and reckless,” and said the surplus should be used for more modest proposals like paid family and medical leave, lowering child care costs and frontline worker bonus checks. They also urged caution on spending, citing the release of an updated economic forecast on Monday that could be impacted by Russia’s invasion of Ukraine this week.

Democratic House Tax Committee Chairman Paul Marquart, of Dilworth, said the Senate GOP proposal would benefit Minnesota’s wealthiest taxpayers and that echoed the Democratic senators’ calls to spend elsewhere.

“We can’t do that if Republicans use the budget surplus to provide tax cuts for millionaires and billionaires who don’t need the state’s help,” he said in the statement.

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Mohamed Ibrahim is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.