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Lawmakers Bicker Over Tax Cuts
by Michael Khoo
March 28, 2000
Part of MPR's Session 2000coverage
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Minnesota House Republicans have passed a tax relief package totalling three-and-a-quarter billion dollars over the next three years. But before the final 85-47 vote had even been tallied, Senate DFLers and Governor Jesse Ventura expressed strong reservations.
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THE HIGHLIGHTS of the Republican tax plan are lifted directly from last year's compromise: a sales tax rebate coupled with an across-the-board income tax cut. The measure would shave half-a-percentage point off the top and bottom income tax rates. The middle tier would drop three-quarters of a percentage point. Representative Ron Abrams of Minnetonka, chairman of the House Taxes Committee, says in the face of ongoing budget surpluses, citizens should expect a break. "We ought not be asking Minnesota families to send money to St. Paul so that we can either spend it or rebate it," Abrams says. "We ought to try to keep that money with Minnesota working families."

DFLers question, however, how much relief the G0P plan provides to working families. While House, Senate, and governor have agreed in principle to a $500 million sales tax rebate, Democrats say the income tax cut is slanted to the state's most fortunate citizens.

"House Democrats believe that the bill actually is a tax cut for the elite in Minnesota," according to House Minority Leader Tom Pugh. "The elite six percent will walk away with 40 percent of the dollars spent on tax cuts."

House Republicans bristle at that assertion, saying it smacks of class warfare. Majority Leader Tim Pawlenty says it's true the higher income brackets get back more, but he says that's only because they contribute more to begin with. Pawlenty says the point is to avoid the over-taxation that leads to surpluses - something he says the DFLers don't accomplish. "What the DFL has to offer is puny little tax cuts," says Pawlenty. "They are offering quasi-tax cuts. They are offering the margarine of tax cuts. They are offering the Diet Coke of tax cuts. If you want real tax cuts, if you want real tax relief in Minnesota, this is the plan, the Republicans have got it."

Of course, Democrats beg to differ. Last week, the Senate approved a DFL-sponsored plan on a 46-21 vote. That measure cuts taxes by less than half the amount in the House bill, and it channels relief through an increase in the personal income-tax exemption and modest license-tab fee reductions.

"What the DFL has to offer is puny little tax cuts."

- Tim Pawlenty
House Majority Leader
Senate leadership says the Republican cut on the highest income bracket is simply unacceptable and, moreover, they say the GOP plan is based on faulty economic predictions. Senate Majority Leader Roger Moe says the Republicans refused to use forecasts prepared by the state finance department and, as result, Moe says the plan will run up a $500 million deficit by 2003.

"I realize that tax cuts are very popular, and let me also add that considering this economic times we're in, that tax cuts are also appropriate," says Moe. "But a tax cut plan that's based on one-time revenue and phony numbers, that's wrong. And that's what they're doing."

Moe says the Senate will not even discuss the House tax bill until both sides agree to use the finance department figures. And the Senate isn't alone. Governor Ventura sent a letter to House leadership saying he won't sign the House proposal in its current form. Tax committee chair Abrams says he's hoping for a compromise.

"Just because numbers appear on nicely printed pieces of paper don't mean that they're correct," says Abrams. "Hopefully we can agree on what is available for either increased spending of an emergency basis or in permanent tax cuts and we'll be able to have a agreement that will involve the governor and the Senate Democrats."

But the governor seems less optimistic. He writes, "We can make no progress unless you commit to the same parameters. The time do do that is now. This is not a negotiable item."