St. Paul, MN—Governor Dayton vetoed a bipartisan tax relief package Monday night that would have provided more than $800 million in tax cuts over the next three years to middle-class Minnesotans. Previously, the governor publicly committed to not holding the tax bill hostage to special session negotiations. Last week, he made two demands on the tax bill and House Republicans immediately agreed to address both. Despite lawmakers’ efforts, the governor vetoed the compromise tax relief bill as leverage for his own new spending projects.
“It’s frustrating to see the Governor break his word to Minnesotans,” said Rep. Peggy Bennett, R-Albert Lea. “Middle-class Minnesotans wanted and needed this tax relief, and it was supported by the majority of members in both parties. Farmers, small business owners, teachers, middle-class families, and more would see benefit from this plan, but their voices went unheard by the Governor’s office.”
Two weeks ago, the legislature passed the 2016 Omnibus Tax Bill (HF848) with broad bipartisan support by a vote of 123-10 in the Republican-led House and 55-12 in the DFL-led Senate—89 percent support from the entire legislature. Now vetoed by Governor Mark Dayton, the bill represents the most bipartisan tax bill vetoed in the past 30 years.
Key provisions include (over the next three years):
- $90.6 million in tax relief for Minnesota farmers. In 2016, more than 61,000 farmers would benefit from an ag bond credit.
- $110 million in tax relief for college graduates paying off student loans through a refundable tax credit up to $1,000, the first of its kind in the country. In 2016, about 52,300 graduates would be eligible for the credit.
- $49 million in tax relief for families who contribute to 529 plans to save for their children's college costs. An estimated 21,000 families would claim the credit in tax year 2016. An estimated 40,400 families would claim the subtraction (some taxpayers would be eligible for both).
- $146 million in tax relief for every small business in Minnesota by exempting the first $100,000 of commercial-industrial property.
- $13 million in tax relief for Minnesota veterans by raising the income eligibility threshold, and increasing the total credit from $750 to $1000.
- $150 million in tax relief for working families by expanding the working family tax credit. Nearly 386,000 families would be affected in tax year 2016.
- $32 million to reduce the cost of childcare by expanding the childcare tax credit, families could earn a tax credit up to a $960. For tax year 2016, the number of families receiving the credit would be 41,400.
- Federal conformity provisions that allow Minnesotans to deduct higher education tuition expenses, mortgage insurance premiums, classroom expenses for teachers, charitable giving (for seniors), and more.
- A substantial increase in Local Government Aid (LGA) and County Program Aid (CPA).
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