TAX TALK: Dayton doesn't support elements of House, Senate bills - KMSP-TV

TAX TALK: Dayton doesn't support elements of House, Senate bills

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ST. PAUL, Minn. (KMSP) -

Taxes are at the center of the discussion at the state Capitol, but Gov. Mark Dayton says he's not throwing his support behind the controversial tax package the Minnesota Senate passed on Monday.

With both chambers of the DFL-controlled Legislature voting to raise taxes, Dayton sounded a bit more like the Republican minority on Tuesday when he told lawmakers in the House and Senate to slow down.

"My goal is to not raise taxes on middle income taxpayers with the exception of the cigarette tax," Dayton clarified on Tuesday.

It may seem somewhat ironic that the man many accused of breaking the bank with his first budget plan is now positioning himself as the protector of the middle class, but the new tax bill that will soon be sent to Dayton's desk will almost certainly hit consumers.

The plan in the Minnesota House of Representatives seeks to expand alcohol taxes by 7 cents a drink, allow counties to levy a $10 wheelage tax on cars and it would also introduce a sports memorabilia tax to help pay for the Vikings stadium.

The Senate bill seeks to drop the sales tax rate to 6 percent by broadening the base of taxable items to include clothing, all digital downloads, online purchases, pay television and personal services like haircuts. On Tuesday, Dayton made it clear that plan does not have his support.

"I strongly oppose extending the sales tax to clothing or any additional services," he warned. "So, I'm basically saying: Leave the sales tax exactly where it is now."

The House and Senate tax plans also differ on how to tax the richest Minnesotans. Dayton has called for a fourth-tier income tax bracket affecting the top 2 percent of earners by upping the rate of joint tax filers making more than $250,000 a year to 9.85 percent.

The House plan would create a new fourth-tier tax bracket, but it would only target the top 1 percent of wage earners, which are joint filers making more than $400,000 annually. That plan would set the income tax rate at 12.5 percent and would also impose a 4 percent surcharge to help speed up the repayment to Minnesota schools; however, Dayton isn't keen on that idea either.

"I support their speed of repayment; I oppose what they're proposing to accomplish that," Dayton said.

The Senate plan does not create a new bracket for the state's top earners, but those making more than $130,000 annually would be taxed at a rate of 9.4 percent under their plan.

Although the omnibus tax packages vary widely in impact and scope, Dayton said he is confident he will be able to meet with DFL leaders and work out a compromise.

"We're going to work it out. We have our disagreements," Dayton said of the bills, which still need to be merged. "They have reasons for their points of view, which I need to better understand."

Staff members are currently comparing the spending targets, and lawmakers could begin meeting with Dayton as soon as Wednesday.

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