House bill ramps up Capitol tax debate

Its authors call it an overdue dose of tax fairness, just what the doctor ordered for in a state rocked by years of property tax hikes. Detractors call it dead on arrival.

The House Taxes Committee Monday rolled out its long awaited omnibus tax bill, destined to ramp up the ongoing tax wars at the Capitol.

The bill offers expanded property tax relief in the $250 million range. But it relies on collecting at least $440 million from a new higher tax tier composed of the wealthiest Minnesotans.

Bigger Checks, More Winners

The chair of the property tax relief subcommittee, Rep Paul Marquart, told reporters the bill would provide some type of homestead property tax refund all families earning up to $150,000 per year. Currently the income cutoff for the so-called "circuit breaker" refund is $92,000.

The individual property tax refund checks would top out at $2500, depending on income and the amount of property taxes paid. The current highest refund available is $1750.

"The property tax relief and reform here is historic," the Democrat from Dilworth told reporters.

"Not only is it huge in terms of numbers and relief, but because we're moving toward ability to pay. We're actually focusing on your ability to pay and making it more progressive."

Those who pay less than two percent of their annual household income in property taxes wouldn't qualify.

Targetting Tax Fairness

"Eighty percent of this burden would fall on Minnesotans who earn over a million dollars," Rep Ann Lenczewski told reporters about the bill.

As chair of the committee, the Bloomington DFLer defended tappping into the income of the wealthiest one percent, defined in this bill as joint filers earning more than $400,000 per year and singles making more than $226,000.

Lenczewski cited the state's own tax incidence study, showing that the highest earners shoulder a lower proportional share of the total state and local tax burden than do middle income Minnesotans.

"This begins to address the unfairness reflected in the state's tax incidence study," Lenczewski explained.

"The folks that are the most fortunate are paying the least as a percentage of their income."

"We actually had our House Research staff tell us that if we wanted the top 10% of earners in Minnesota to carry the same share everyone else is we'd actually have to raise their income tax rate to 13.7%. We're only going to 9."

Republicans Not Amused

The Republican response was to label the entire package an excercise in futility.

"To be honest it?s dead on arrival at the governor?s office," House Minority Leader Marty Seifert told KARE 11 News.

"If they want to go through the motions of marking it up that's fine. But a $583 million tax increase when we have a $2 billion surplus doesn?t make a whole lot of sense."

Seifert said Republicans won't be tempted to buy into the tradeoff being offered, i.e. property tax relief for many financed by income tax hikes for the elite.

"It?s a temporary buy-down. You have a permanent income tax increase for a trade-off of a temporary property tax increase."

"We?ve done this in the past when we?ve bought down property taxes and they creep back up in about four or five years," Seifert asserted.

"We had a massive reduction in 2001 and that?ll get you through a couple of elections and then it?s back up again. It needs to be permanent structural reform." Although the GOP contingent at the Capitol is greatly outnumbered this session, it won't stop Republicans from trying fight the bill with amendments.

As Seifert put it, "We?re trying to let the Democrats know what?s unacceptable: in-state tuition for illegal aliens, the gay marriage type benefits for state employees and the big tax increases."

No Mention of Megamall

Absent from the bill is any public financing language for the Mall of America's proposed phase two financing. The Senate has already passed language which allow the city of Bloomington to expand the Mall's special tax district and finance a parking structure.

Rep Lenczewski has been a steadfast opponent of the any additional public subsidies for the MOA, although she acknowledged there will be efforts from the Senate side to amend the MOA into the bill in conference committee.

"I do feel that the house has a history of being harder on corporate subsidies than the Senate," Lenczewski said.

The Mystery of Kids and Taxes Although the bill won't reach the House floor until Saturday or next Monday it's already the source of humorous rhetorical barbs being lobbed across the aisle.

Monday Majority Leader Tony Sertich, D-Chisholm, asked his GOP counterpart Seifert why his children were sitting with him in the House chamber.

Seifert shot back, "We were thinking of fleeing the state from all the tax increases being unveiled today."

The response from Sertich?

"You may be trying to flee the tax increases, we?re trying to get them more funding for their schools."

In reality the two Seifert youngsters were in the House to help Seifert celebrate his 35th birthday. And Sertich asked for round of applause and standing ovation for his political adversary.

When asked later just what he hoped his son and daughter learned from the experience, Seifert replied with his trademark humor.

"I hope they learn to work together and play nice just like kindergarten is supposed to be."

By John Croman, KARE 11 News

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