- Associated Press - Monday, April 20, 2015

ST. PAUL, Minn. (AP) - Minnesota House Republicans offered a slate of proposed income tax credits and business breaks Monday in their push to provide $2 billion in overall relief, including a new personal exemption for every filer that would expire after two years.

The GOP’s proposal could be difficult to achieve given resistance by Democratic Gov. Mark Dayton and majority Senate Democrats to cut taxes so deeply just as Minnesota is back on sound fiscal footing. Its Republican architects said they were making a statement about their priorities at a time when Minnesota has a projected $1.8 billion surplus.

“It boils down to a basic philosophy,” said House Tax Committee Chairman Greg Davids, R-Preston. “Do you want a bigger government or do you want the people of Minnesota to make a decision about how they spend their money?”

He and other GOP leaders said they were delivering middle-class tax relief through the patchwork of credits for education expenses, student loan paybacks and child and elderly care costs. They touted a new $1,000 per person exemption that would reduce tax liabilities for every filer and take $539 million out of state coffers. But that exemption would go away after two years.

House Majority Leader Joyce Peppin, R-Rogers, estimated that a family of four could see $500 in savings over two years from the personal exemption alone, though the exact amount would depend on how much people make and what other relief they qualify for.

Other tax breaks start smaller but ramp up. A provision that allows filers to subtract Social Security income would be gradually phased-in until all of that money would be exempt from taxes in 2019, at a $379 million cost to Minnesota’s treasury.

For businesses, the plan would phase out a state tax on commercial and industrial property over six years starting with exemptions on the first $500,000 in value in year one. There would be a similar drawdown of a state tax on recreational property, starting with an exemption on the first $250,000 in value. Combined, those breaks total $453 million in the first two years but add up to $1 billion in the following two years.

Senate Majority Leader Tom Bakk said Democrats would make a far smaller proposal, but one that would include some property tax relief for businesses.

House Democrats questioned the Republican priorities, describing the plan as tilted toward business when the full scope of relief is considered.

“People are getting about $50 to $70 per year while behind them in the back room Republicans are shoveling $5 billion in tax cuts to businesses,” said House Minority Leader Paul Thissen, DFL-Minneapolis.

Thissen was surrounded at a news conference by people concerned about flat or reduced program spending in other areas of the budget because the GOP is aiming for savings to afford the tax cuts. Among them was Leslie Hodgson, a farmer and constituent of Davids from Fountain who is worried about a proposed dismantling of the MinnesotaCare program that gets her and her husband access to health insurance for $100 monthly premiums.

“It’s made a huge change in our lives,” she said. “I really hope they don’t destroy MinnesotaCare at least for a while until they get a good look at it.”

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