ST. PAUL, Minn. - Minnesota Gov. Mark Dayton hopes to raise $2.1 billion more in state taxes, partly by subjecting more items to the sales tax in a tradeoff for a lowered rate.
The Democrat's proposal Tuesday covers the waterfront in taxes. It would hike the amount owed on income above $150,000 for single filers, subject high-end clothing to the sales tax and raise cigarette taxes by 94 cents per pack. But he also wants to cut the corporate tax and provide property tax rebates of up to $500.
Dayton is proposing Minnesotans pay a lower overall sales tax rate but that it should be applied to more goods and services, including clothes over $100.
"If the investments in my budget proposal are made, they will yield returns in new jobs, private investments, vibrant communities and additional state and local tax revenues; and they will help keep our economy moving forward," said Dayton. "They represent my best judgment about what Minnesota needs to grow our economy, expand our middle class, improve our quality of life and take care of those most in need."
The budget blueprint Dayton is unveiling Tuesday proposes big changes to the state's sales tax. It would apply the sales tax to some services now exempt, but would continue to exempt food and medical services along with clothing purchases under $100.
More things would be subject to the state sales tax, but its overall rate would drop from the current 6.875 percent down to 5.5 percent under Dayton's proposal. That's a 20-percent decrease, which Dayton's office says is the largest in state history.
They say Minnesota would go from the 7th highest sales tax rate to the 27th highest among U.S. states.
A property tax rebate of up to $500 is also part of Dayton's budget package.
On the education front, Dayton's proposed increase of $52 per public school student is part of a more than $600 million increase in education spending that the governor is seeking for the state's next two-year budget, which he outlined Tuesday morning.
Dayton is also pushing for more money for all-day kindergarten programs, early education scholarships and for the state's public universities and colleges.
The governor says his education investments are necessary to improve Minnesota and its economy. His plan for more education spending accounts for almost two-thirds of his proposed state spending increases.
Dayton has made funding K-12 education a top priority for his first term. He's pledged to increase funding every year in office.
The budget release Tuesday is the starting point in a tax-and-spending debate that will reach well into spring. With fellow Democrats now in charge of the Legislature, Dayton's plan carries tremendous weight and a high likelihood that much of it will be enacted.
Dayton has long said he would push for higher income taxes on top-end earners, though he has been guarded about what that rate will be and how much someone can make before it will kick in. Sales, property and corporate taxes are also on the table, with rate reductions possible for some.
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