Speaker of the House
Steve Sviggum

Since the Senate passed a version of Governor Ventura's sales tax give back plan, the bill now goes to a House-Senate conference committee, where the debate begins between the sales tax give back and the income tax rebate. The House plan can be described with three simple words: now, more, fair.

Now

After watching and listening to Gov. Ventura run for office last year, I am surprised and disappointed that his rebate plan takes so long to give our money back. I remember Jesse "The Candidate" Ventura saying over and over he was the only candidate on the steps of the capitol saying "Give it Back Now!" The steps of the capitol are still there, the money's still there, but Gov. Ventura has suddenly disappeared from the debate. Under his plan, our money will sit in the state's bank accounts until he says we can have it back, presumably sometime next October. Why has he changed his mind? Why can't we get our money back now, so it could earn interest in our bank accounts instead of state government's?

The plan passed by the House gives the money back 60 days after the bill is signed. If the Governor signs the bill soon, we could have our refund checks by May.

More

Not only will the House plan get money in your pocket sooner, it will also give more money back. In addition to the $1.1 billion in our income tax rebate, we have also added an extra $400 million for a property tax rebate.

Some taxpayers will receive only the income tax rebate, a dollar for dollar rebate up to $150 of what you paid in plus 20% of your state tax after $150. Some taxpayers, such as senior citizens who pay no income tax, will receive only the property tax rebate, based on the rebates given out in 1997 and 1998.

But most taxpayers will receive both! Families at all income levels will receive more money under the $1.5 billion combined income tax /property tax rebate plan when compared to the $1.1 billion sales tax plan. And the House plan will send checks to everyone in the state, while the Ventura/DFL plan only gives money back to those who were eligible for last year's property tax rebate.

We also provide a real rebate for farm families hit hard by the current commodity price crisis, We give farmers hope for next year with a $75 million agriculture property tax rebate. Gov. Ventura gives farmers a tiny, $10 million bureaucratic welfare program. Both DFL and Republican House members have been critical of Ventura's complete lack of understanding of the situation facing rural Minnesota today.

When it comes to the total amount of money given back, the plan passed by the Senate has a glaring, $400 million hole. They are against converting the bonding money back to cash, and they have plans to spend the tobacco money on new government programs. Yet they claim their rebate bill is $1.1 billion. Before we can even talk about how and when to give the money back, the Senate has to tell us where they plan to get the money.

Fair

If your electric company accidently overcharged you for service during the course of the year, you would expect them to calculate the overage and send you a check as soon as they figured out their mistake. You would be outraged if they took your money and sent it to other customers because the electric company felt it would be fair to do so. That was your money, and you would expect it returned to you.

This is exactly what has happened with the surplus. The state collected too much from your monthly paycheck and now the Governor and the Democrats are trying to return your money to its other "customers," some of whom haven't even paid into the surplus. It is a "radical" idea but the House plan gives money back to those Minnesotans who accounted for the surplus.

No one argues that the majority of the current budget surplus came from an over-collection of income taxes and the House bill fairly and simply returns that money back to the families who paid it in the first place. A sales tax rebate is based on guesswork and estimates and is only "fair" if you happen to be one of the lucky ones who end up with more money back than you put in.

The April Surprise

The reason the Governor and others are leaning toward the sales tax "rebate" is they think it won't be taxable by the federal government. The problem is, the IRS won't tell anyone whether it's taxable until it's too late. This uncertainty has become known around the capitol as the "April Surprise." Taxpayers may be surprised, even shocked when the IRS rules they have to send some of their surplus to the Federal government. Especially after all the hype about how it's not taxable.

As an elected official, I feel much better being up front with my constituents about whether or not their rebate check will be taxable. We know, today, that 60% of the people who receive a rebate check under the House plan will not have to pay Federal taxes on that money. The only ones who will have to pay taxes on their rebates will be people who itemize on their Federal returns, usually taxpayers in the higher income brackets.

Despite all the attention being paid to the one-time rebate proposals, the bigger question before the legislature is how we are going to prevent future surpluses from piling up in the state's coffers. House Republicans have proposed the largest permanent income tax cut in the history of Minnesota, and the sooner we find a compromise on the rebate, the sooner we can talk about a real permanent tax cut for every Minnesota family.