Minn. House budget would up taxes on wealthy, drinkers, smokers - Dallas News | myFOXdfw.com

Minn. House budget would up taxes on wealthy, drinkers, smokers

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ST. PAUL, Minn. (KMSP) -

April 15 is the deadline to file income taxes, and if the DFL-controlled House budget presented on Monday is approved, the wealthiest Minnesotans could pay more next year.

One of the top priorities in the House plan is to pay back $850 million borrowed from schools by raising income taxes on the rich and adding a 4 percent surcharge on the so-called "super rich." As expected, House Republicans did not greet the budget gladly.

"Happy Tax Day, a day when the Democrat-controlled Legislature added $2.5 billion in new taxes," said Rep. Tony Albright, a Republican from Prior Lake.

Whether the timing was planned or pure coincidence, Republicans seized the opportunity to attack the Democrats' budget bill.

"Their reality TV show is 'Taxes Gone Wild,' and the Republican minority cannot stop them," said Rep. Greg Davids, a Republican from Preston. "There are no safeguards for Minnesotans."

The proposal would provide some property tax relief by reinstating the Homestead Credit Refund, but the bill raises taxes on the wealthiest residents by creating a fourth-tier tax bracket raising income tax to nearly 8.4 percent for the top 1 percent of Minnesotans. That would affect families making over $400,000, singles making over $226,000 and head-of-households making $340,000 annually.

"We promised Minnesotans we would take a balanced approach and we are," said Rep. Erin Murphy, a Democrat from St. Paul. "We are using all the tools available to get Minnesota on a better footing financially and into a brighter future."

The bill also includes a two-year tax surcharge for couples making over $500,000 a year.

Smokers and drinkers would also pay more under the plan, which would more than double the cigarette tax to $2.38 per pack. Lawmakers are also hoping to tax alcohol by volume, not by price.

"There is overwhelming evidence that alcohol and tobacco consumption cost the state economy billions," House Majority Leader Paul Thissen said. "These user tax increases will allow our state to recuperate those costs."

The bill would increase the tax on hard liquor to $1.58 per liter, and wine drinkers would pay another 47 cents per bottle. Beer would also go up 7 cents per 12-oz. can or bottle.

"That affects everybody," Davids protested. "This bill hurts low-income, middle-income, upper-income. They're equal-opportunity hurters."

On Monday night, the House Tax Committee went over the detailed bill line-by-line, but that wasn't enough to satisfy Republican critics.

"If this is a balanced approach, I would certainly hate to see an unbalanced approach," Davids quipped.

Supporters of the bill claim it will also grow jobs in Minnesota by investing in the Mayo Clinic in Rochester as well as supporting expansions at the Mall of America and 3M.

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