Dear Friends,
Last week found me in the hospital having my inflamed gall bladder removed. I had to undergo another procedure on Wednesday, and spent the weekend recovering at home in Waseca.
I am back at the Capitol today, fully recovered and ready for the final stretch here as we finish our work for the 2013 legislative session. Thank you to those of you who sent get-well messages and notes of support during my time in the hospital.
Deal on tax bill remains uncertain
With the last of the snow having melted, spring is finally upon us in Minnesota and the legislature in Saint Paul has completed the first major step in reaching a budget deal before the end of session.
Over the past few weeks, lawmakers have debated and passed all portions of the 2014-2015 biennium budget in the House and Senate. Over the coming weeks, members of the House and Senate will work out the differences between the budget bills passed by each chamber in what is known as conference committee. In each budget area, members of the conference committee must reach agreement on a final, identical bill to be sent back to both the House and the Senate to be adopted or rejected, and ultimately passed. At that point, the bills will head to the Governor's desk for his signature.
The House and the Senate have vastly different approaches in their tax plans. Reconciling the differences between the two will have serious impacts on Minnesota families, so it's important to note the aspects of each bill given that all of the provisions in each bill are on the table to be a part of the final bill that comes back from conference committee.
In the House, a new 4th tier income tax on the top 2% of Minnesota income-earners generates $282 million dollars, as well as another $1.23 billion generated through a temporary surcharge on those making more than $500,000. Lowering income thresholds for the lower tax brackets brings in another $235 million dollars.
What you need to know is that lowering income tax bracket threshold could mean a tax increase for those making as little as $21,651 dollars per year who could be vaulted into a higher tax bracket. This is important because it impacts working Minnesotans at every income level -- not just the rich.
Also included in the House plan are higher taxes on sports memorabilia, cigarettes, and alcohol, including a 600% increase in the beer excise tax. All in all, the House tax plan raises about $2.6 billion dollars in taxes, with another $300 million dollars in fees coming from other budget areas for a new revenue total of about $3 billion dollars.
The Senate plan sets the top tax rate starting at $80,000, increasing taxes on the top 7% of taxpayers. Additionally, it brings back aspects of the plan initially proposed by the Governor to lower the sales tax rate, but broaden it to include items such as clothing, auto repairs, and many other goods and services.
Negotiations continue this week to determine what the final tax bill will look like. Once it returns to the House, I plan to thoroughly examine the bill and determine whether or not it will unfairly impact hardworking low and middle-income Minnesotans. That's not what I believe we were sent here to do, and I think it's the wrong approach for solving our state's budget.
As always, I welcome your input, feedback, and questions about how best to solve our state's budget gap. Please contact my office at 651-296-5368 or at rep.john.petersburg@house.mn. Thank you for the continued privilege of serving you and our district here in Saint Paul. I look forward to hearing from you.
John Petersburg
State Representative, District 24A