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Senate approves income tax increase
Republican Gov. Tim Pawlenty has promised to block the tax hike, which inflamed GOP senators and was also rejected by seven Democrats. The tax proposal was part of an education funding package that passed 35-29 -- just one vote above the bare minimum needed. "When you read the papers and hear that Minnesota might be number one in the country in a particular tax bracket, I'm very uncomfortable with that," said Sen. Kathy Saltzman, DFL-Woodbury, one of five first-term DFLers who voted against the bill. The bill would funnel $444 million into preschool through college education, including an early childhood subsidy for families to pay for the program of their choice. Saturday's vote capped the first half of the session, as Democrats tested the limits of their legislative power in the face of Pawlenty's veto threats. The tax proposal would raise almost $1 billion by creating a new fourth-tier income tax rate of 9.7 percent. The rate would hit taxable income above $250,000 for joint filers and $141,250 for single filers. Minnesota's top rate is currently 7.85 percent. Only California, Vermont and Oregon have top rates of 9 percent or more. Republicans tried to make just one change -- to make the bill's title say "creating the highest single general income tax rate in the nation." That failed. They also exercised an infrequently used right to register a protest in the official record, saying the bill violates the state constitution by addressing more than one subject. "This bill is DOA," said Sen. Tom Neuville, R-Northfield. "There's no chance that the governor is going to sign this type of an income tax increase." Democrats said the package would renew Minnesota's commitment to educating the next generation and make the tax system fairer, so those at the top would pay a share comparable to what everyone else pays. They said the $56.3 million early childhood program would help even out achievement gaps between white and minority children. The bill would also boost school funding 2 percent a year, at a total cost of $292.7 million. Another $93 million would go to the University of Minnesota and Minnesota State Colleges and Universities to hold down tuition increases. "This is an investment in our future," said Senate Majority Leader Larry Pogemiller, DFL-Minneapolis. "This is an investment in our children." Pogemiller said Senate Democrats are holding out for property tax relief and a permanent increase in education funding this year. But he wouldn't elaborate on what a compromise might look like or how it would be brokered by the May 21 deadline for adjournment. The DFL-led House is also considering a new top-tier income tax rate, but theirs is more modest than the Senate's. Pawlenty's opposition to new taxes hasn't wavered. Senators started their spring break after the floor session, with some thinking about how to explain their votes on the tax-and-schools package. One of them was first-term Sen. John Doll, DFL-Burnsville, who voted no. He said he was concerned about how his constituents would handle the number of tax increases being proposed this year, including a dime-a-gallon gas tax increase. "It's a tough vote in that I campaigned on early childhood education needs," Doll said. But, he added, "I have to look at all of the folks in my district. It's a balance of trying to meet those additional needs and investments." Copyright 2007 by The Associated Press (Copyright 2007 by KARE. All Rights Reserved.)
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