The battle of dueling tax bills is closer to a conference committee.
The omnibus tax bill is on its way to the floor after being approved by the House Ways and Means Committee Wednesday by a 16-10 party line vote. Sponsored by Rep. Paul Marquart (DFL-Dilworth), HF3669, as amended, would result in $1.65 billion in tax reductions and credits in the 2022-23 biennium, according to the Department of Revenue.
Its Senate companion, SF3692, sponsored by Sen. Carla Nelson (R-Rochester), contains only two principal provisions, as opposed to the dozens in the House bill. Passed April 7 by the Senate, SF3692 would exempt all Social Security benefits from taxation and reduce the first-tier income tax rate from 5.35% to 2.80%.
Meanwhile, the most significant tax cut in the House bill would come from an expansion of the renter’s credit, which would become a refundable credit payable on the same schedule as other income tax refunds. Its $372.6 million impact on the state’s General Fund in fiscal year 2023 would be the largest in the bill.
“This is a strong bipartisan bill that’s going to make a meaningful impact on the lives of our senior citizens and our families,” Marquart said. “And, on top of that, it’s going to propose the largest property tax cuts in over 20 years.”
Marquart emphasized how provisions in the bill would reduce the tax burdens of families with young children and senior citizens, be they homeowners or renters.
Rep. Pat Garofalo (R-Farmington) crafted two proposed amendments that were withdrawn. The only other proposed amendment came from Rep. Mike Sundin (DFL-Esko), which would have altered state policy concerning fire and ambulance special taxing districts. It was not adopted.
Three Republicans had questions about how proposed changes in the renter’s credit would affect the taxes of rental property owners in municipalities that have adopted rent control ordinances. Those questions remained unresolved.
Among other proposed cuts, credits and new aid programs in the bill are: