St. Paul, MN (NNCNOW.com) - Governor Mark Dayton proposed $616 million in tax cuts Thursday that would put more money in the pockets of middle class Minnesotans and benefit thousands of Minnesota businesses.
The Governor’s proposal would allocate the remaining half of Minnesota’s $1.2 billion surplus to the state’s budget reserve, before allowing for up to $162 million in essential expenditures.
The proposal would increase the current budget reserve by $455 million if the legislature follows his recommendations – the first increase since 2001.
“Minnesota’s economy has added 133,000 new jobs during the last three years. Our improving economy has greatly improved the state’s budget forecast – giving us the opportunity to put more money in the pockets of Minnesota families and businesses,” said Governor Dayton. “I urge members from both parties to work together to pass these tax cuts quickly.”
More information about the Governor’s tax proposal is available online at http://mn.gov/governor.
Reducing Taxes for Middle Class Minnesotans ($301M)
By conforming Minnesota’s tax code to the federal government’s, Governor Dayton’s tax plan would simplify taxes and provide tax relief for middle class Minnesotans.
• Tax Relief for Married Couples. More than 650,000 married couples would save an average $115 per year under the Governor’s plan to eliminate the “marriage penalty.”
• Tax Relief for Working Families. Under the Governor’s tax plan, 13,000 more middle class families would qualify for the Working Family Tax Credit, and 40,000 would receive an increased credit. These families would save an average $334.
• Tax Relief for Day Care. By expanding tax credits for child care, the number of families benefitting would increase from 36,000 to 170,000. The average tax benefit would increase $430 per year.
• Tax Relief for Students. The Governor’s tax plan would provide 285,000 recent college graduates up to $190 per year by deducting their student loan interest. Another 40,000 current college students and parents would receive a tuition deduction of $140 per year, on average.
• Tax Relief for Small Employers. Small businesses would be able to offer their employees tax-free tuition and adoption assistance. The Governor’s tax plan would also simplify small business taxes by eliminating requirements to maintain separate records for federal taxes.
• Additional Tax Relief. The Governor’s plan for middle class tax relief would also help seniors, veterans, teachers, and homeowners. More information at: http://www.mn.gov/governor/images/2014_03_06_middle_class_tax_cuts.pdf
Reducing Business Sales Taxes ($232M)
In light of the budget surplus, Governor Dayton is calling for the repeal of all three business-to-business taxes passed in the last legislative session.
• Electronic, Farm and Commercial Equipment Repair Tax. The Governor’s tax plan eliminates sales taxes on repair and maintenance of electronic and commercial equipment. This includes repair and maintenance of farm equipment.
• Warehousing and Storage Services Tax. The Governor’s plan eliminates the warehousing sales tax that is set to take effect on April 1, 2014.
• Telecommunications Equipment Tax. The Governor’s plan eliminates sales taxes on telecommunications equipment.
Tax Credits for Innovation and Jobs ($15M)
Governor Dayton has proposed additional tax credits to fuel innovation and create jobs.
• Angel Investor Tax Credit. The Governor’s tax plan offers $15 million more in tax credits for startup businesses and entrepreneurs. A recent report showed this tax credit has already created 500 new jobs and spurred over $100 million of new private investment in Minnesota’s economy.
• Additional Business Tax Relief. Businesses large and small would benefit from additional business tax reductions and credits included in the Governor’s tax plan. More details about which businesses would benefit from additional tax cuts is available at: http://www.mn.gov/governor/images/2014_03_06_business_tax_cuts.pdf
Reducing Taxes for Local Governments and Non-Profits ($25M)
The Governor’s tax plan would provide additional relief for local governments.
• Eliminating Sales Taxes for Local Governments. Last session, Governor Dayton and the Legislature eliminated the sales tax on most purchases by city and county governments. That exemption has reduced the costs of local governments, and helped hold the line on property taxes. The Governor’s proposal would extend those tax exemptions to local government districts and local joint powers entities that provide shared services for cities, counties, and townships.
• Reducing Sales Taxes for Non-Profits. The Governor’s proposal would reduce sales taxes paid by non-profits for fundraising expenses.
Simplifying the Estate Tax & Eliminating the Gift Tax ($43M)
The Governor’s tax plan would also simplify the estate tax and eliminate the gift tax, providing millions of dollars in additional tax relief for Minnesotans.
• Eliminating the Gift Tax. The Governor proposes eliminating the gift tax, in order to be more competitive with other states. Only one other state has a gift tax.
• Simplifying the Estate Tax. The Governor’s plan simplifies the estate tax and raises the exemption from $1 million to $2 million – the first exemption increase enacted in over a decade.