All but two members of the Minnesota House voted in favor of a $500 million tax cut on Thursday evening. The bill’s overwhelming passage, delayed only by a few political speeches, sets the stage for a race to get the same package approved by the Senate some time next week. House Democrats and Gov. Mark Dayton have are both hoping for the tax plan to be signed into law by March 14, a date which would allow individual income tax filers to use new exemptions which could add up to $200 million worth of savings.
The House bill also repealed more than $300 million in business-to-business taxes which passed last session, but soon become unpopular even with some DFL legislators who voted for them. The bill passed by a count of 126-2, with only DFL Reps. Jason Metsa (Virginia) and Ryan Winkler (Golden Valley) voting in opposition.
Bill author and House Taxes Committee chair Rep. Ann Lenczewski, DFL-Bloomington, said it was crucial to separate those two aspects out from an omnibus tax bill to assure the bill could pass quickly.
“I just want to underline that I’m so grateful that we are all moving quickly,” Lenczewski said. She added: “We need to do federal conformity right now, because people are filing their taxes right now.”
The mid-March date is also favored by those looking to block implementation of a warehousing services tax which will kick in on April 1.
Republican speakers expressed gratitude for the Democrats’ course of action, though several used the occasion to criticize the DFL for passing the taxes in the first place. GOP members spoke of losses in employment and of businesses affected by the new taxes, with some telling stories of constituents who had taken their business across nearby borders to save money.
Rep. Greg Davids, R-Preston, Republican lead on the House Taxes Committee, said the House had been “rolled” last session by the Senate, which crafted the new business taxes and chose not to pass a federal tax conformity bill. Davids added that he favored the plan released as part of Dayton’s supplemental budget earlier in the day, because that proposal included a repeal of the gift tax.
Thursday’s debate quickly took a turn away from the issue of taxes, thanks to the introduction of a number of Republican amendments that dealt with MNsure, the state health insurance exchange. One amendment offered by Rep. Joe Hoppe, R-Chaska, would have provided for a state-issued rebate for Minnesotans hit by the $95 federal tax penalty for failing to purchase insurance before the March 31 deadline. House Majority Leader Erin Murphy replied that the MNsure website performance was significantly improved since the exchange’s rocky opening months, and said Hoppe’s amendment was misguided.
“I don’t think we should give a tax refund to those who are avoiding or breaking the law,” Murphy said.
Hoppe’s amendment fell by a 58-69 margin. The House did adopt an amendment authored by Rep. Jenifer Loon, R-Eden Prairie. Loon’s amendment adds the “dependent care credit” tax deduction to the bill, providing tax relief to lower income families with young children in daycare. About 80 percent of the people who use that deduction are single parents, Loon said, and the state has typically provided for the tax credit in the past.
Among the Republicans who seized on the chance to speak out was Rep. Kurt Zellers, R-Maple Grove, who is now seeking the Republican nomination for governor. Zellers said the tax increases passed in 2013 could be only the beginning to DFL plans, and floated the possibility of sales taxes eventually being added to additional services such as accounting and legal fees.
“You’re making our state uncompetitive for growth, for expansion, for new development,” Zellers said. “You’re not making it an environment where people come in and say, ‘That’s consistent tax policy.'”
In a press conference prior to the floor session, House Speaker Paul Thissen said Lenczewski and the tax committee were already at work on another tax bill to deal with different elements of the tax code, such as property tax relief and tax increment financing (TIF). Thissen also said he would continue to make the case to Senate Democrats to quickly pass the tax relief bill.
“We certainly have had conversations with them, and I think they understand the need and the urgency to move on this,” Thissen said.