Local state Sens. Julie Rosen and Bill Weber have joined with Senate Republicans in proposing what they are calling significant changes to the state’s tax code.
The proposal, put forth last Thursday, reduces the first-tier income tax rate from 5.35 percent to 2.8 percent and eliminates the tax on Social Security. If passed, Rosen and Weber say, the changes would represent the largest tax cut in state history and provide $8.51 billion in tax relief to taxpayers over the next three years.
The proposal comes as the latest state budget forecast shows an estimated $9.3 billion surplus. That’s up from the December forecast, which projected a $7.74 billion surplus.
“With a record surplus, there is simply no reason why we shouldn’t help Minnesotans with permanent tax relief,” said Weber, R-Luverne, who represents western Jackson County in the state Senate. “As one of the highest taxed states in the country, we have an opportunity to help families and seniors who are being hammered by inflation and a struggling economy. It’s time for us to do the right thing and give that money back.”
Rosen, R-Fairmont, who chairs the Senate Finance Committee, agreed.
“A $9 billion surplus means government took way too much from taxpayers at a time when people are still struggling to afford everyday life,” Rosen, who represents eastern Jackson County, said Monday afternoon. “We have a duty to give it back with real, permanent, significant tax relief. No election-year gimmicks or one-off checks. Minnesotans deserve real tax relief. There’s no excuse.”
According to the National Tax Foundation, Minnesota’s lowest tax bracket is higher than the highest tax bracket in 17 other states. Under the Republican proposal, a Minnesota family making $100,000 would see a tax savings of $1,000 each year. A typical individual making $37,000 would receive a $500 annual reduction.
The proposal also eliminates the tax on Social Security and Disability Income, something Senate Republicans have advocated for years.
Minnesota is one of just 13 states that tax Social Security benefits and is partially surrounded by states who do not tax this benefit — among them, Iowa, Wisconsin, Michigan and South Dakota. Estimates show for the 410,900 Minnesotans who pay this tax, the average relief would be $1,313.
Eliminating the Social Security tax would put $539 million back into the hands of beneficiaries.
“When I first heard of this massive budget surplus, the first thing I thought was, “Give it back to our seniors. Give it back in elimination of the Social Security tax,’” Rosen said. “It’s quite simple. It will make a huge, significant difference to our seniors all across the state.”