Howe: Bill Lowers Income Tax Rate, Spends State’s Reserve Fund
ST. PAUL -- Many of us will be getting a small tax break in a bill that is ready to be voted on by the Minnesota Legislature. Republican Senator Jeff Howe of Rockville was on the tax committee that helped put the bill together.
He says the bill moves the second-tier income tax from 7.05 percent down to 6.8 percent. That means a single person making between $26,521 and $87,110 will have less taken out of their paychecks. For someone who is married and filing jointly the wage bracket is between $38,771 and $154,020.
The tax bill also includes more money for cities and counties in the form of Local Government Aid. Howe says he is in favor of an increase but not as much as they are getting.
But holy smokes I wasn't prepared to see how big that actually got because that got up to $30 million annually to both the LGA and the CPA. So, with that, I can only hope that they reduce some property taxes.
Howe says under the legislation Minnesota businesses will get some relief from a $50 million annual reduction in the statewide property tax rate.
Howe says he is concerned that this bill spends too much money and dips into the state's rainy day fund to pay for it.
My complaint on the tax bill is that the state took about, I would argue, over $600 million out of the reserves to spend.
Senate DFL Leader Tom Bakk shares Howes concerns about dipping into the reserve funds.
There is deep concern among the Senate DFL that this budget uses $500 million of the state’s rainy-day fund to prop up spending in the next biennium, leaving only $491 million on the bottom line for 2022. A robust budget reserve is a critical part of adequately preparing for the next economic downturn.
Howe says he feels the bill was rushed together, following the leaders deal on Sunday, and he wishes they would have taken a week to craft a better bill with a vote sometime next week.