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Senate budget avoids surcharge that House Democrats want

ST. PAUL -- Senate Democrats do not want to place an income tax surcharge on the richest of the rich, but they are looking into expanding a new tax the governor wants on the top 2 percent of Minnesota earners.

“We are going to take a look at whether the top 2 percent is the right number,” Senate Majority Leader Tom Bakk, DFL-Cook, said Wednesday after announcing a framework of the Senate Democrats’ budget plan.

Gov. Mark Dayton proposes increasing income taxes on individuals earning more than $150,000 in annual taxable income and couples with $250,000 income. Bakk said senators will look into whether to expand the concept to increase taxes on those making “slightly” less.

Bakk said senators probably will not agree with House Democrats, who back Dayton’s high-earner tax increase and also want to put a two-year tax surcharge on those in the top 1 percent of incomes.

Dayton said the surcharge, of an undetermined amount, is going too far and he does not support it.

Overall, the Senate, House and Dayton budget plans are a lot alike.

“It shows very similar priorities,” Bakk said.

The biggest difference among budgets is that the Senate plan would increase local state aid and property tax breaks by $464 million in a two-year, $38 billion budget. The other two plans suggest smaller increases.

The House and Senate would cut health and human services programs by $150 million while Dayton calls for an increase.

Spending in the current budget ending June 30 is slightly more than $35 billion. The House proposal comes in slightly less than $38 billion while the Senate just tops that figure. The governor’s plan falls in between.

Bakk said tax committees will decide specifics on a Senate tax increase, but predicted it will come in at about $2 billion. The other $1 billion of the budget increase would come from more revenue coming from a better economy.

Senate Minority Leader David Hann, R-Eden Prairie, said no more taxes are needed.

Besides the tax on high earners, Bakk predicted senators will agree with Dayton on increasing cigarette taxes. He also said he feels “very strongly about” taxing on line purchases.

Danielle Killey of the Forum News Service contributed to this report. 

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.