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Legislative talk turns to taxes

ST. PAUL -- Minnesota legislators are more than a third of the way through their 2016 session and just beginning to talk about taxes, always one of the Capitol's big issues.

ST. PAUL - Minnesota legislators are more than a third of the way through their 2016 session and just beginning to talk about taxes, always one of the Capitol’s big issues.

Senators Tuesday began digging into a Gov. Mark Dayton plan that centers on cutting taxes for up to 126,000 families who need help affording child care. His proposal, offered weeks ago, touches on a range of other issues, including ramping up enforcement of cigarette tax payments.
Tax bills lawmakers passed last year sit in a House-Senate conference committee awaiting negotiations, which will focus on how to fit tax cuts into a small-than-expected budget surplus. Republicans last year called for $2 billion in tax cuts, about the size of the surplus that was expected at the time. Democrats looked at a $500 million cut.
The latest surplus projection is $900 million, so Republicans said they plan to reduce their tax cut request.

Observers widely expect legislative leaders and Dayton to tie taxes together with transportation funding, public works projects and other major issues being considered this year. Serious discussions are expected as the May 23 legislative adjournment date nears.
Dayton’s proposal could give 92,000 more families child care tax credits, resulting in 126,000 families getting those credits overall.
Dayton, a Democrat, calls for increasing the upper income for the tax credits from $39,000 to $112,000 for families with one child and up to $124,000 for two-child families. The tax cut would cost more than $100 million.
State Revenue Commissioner Cynthia Bauerly called the tax break “a significant expansion across the middle income families.”
She said that cuts could be up to $2,100, but most families would average $472.
Minnesota parents pay the fourth most for child care costs in the country, Bauerly said.
While Republican House leaders say they like the child care credit idea, Senate Taxes Chairman Rod Skoe, D-Clearbrook, has other ideas.
“The committee is sympathetic in that area, but we do have some other mechanisms” in mind, Skoe said. “We think there are more efficient ways to use the resources.”
For many families, he said, flex plans offered by some employers allow parents to use untaxed money to pay for child care, “which would be a significantly larger amount of money than a credit would be.”
One part of the Dayton plan would crack down on people who bring in cigarettes from surrounding lower-tax states. He also wants to increase penalties for not complying with Minnesota tobacco tax laws.
Sen. Paul Gazelka, R-Nisswa, brought up a common Republican opposition to the tobacco tax increase when he asked Bauerly if the 2013 120 percent increase in tobacco taxes influenced the tobacco smuggling increase.
“Certainly, he have seen an increase coming in from states with lower taxes,” Bauerly said.

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