Session Update: Tax Committee Considers Governor's Tax Proposal

Skepticism over the tax increases proposed by Governor Walz as part of his COVID-19 Recovery Budget for FY22-23 arose following the Department of Revenue’s presentation to the Senate Tax Committee Thursday, January 28. The Governor’s tax bill would raise an additional $1.636 billion by adding a fifth income tax tier for high earners, include a surcharge on long term capital gains and qualified dividends and raise taxes on tobacco products. The additional revenue would then be used to bolster the incomes of those hardest hit by the pandemic: expanding the first tier individual income tax bracket, increasing the Working Family Tax Credit and investing in the Angel Tax Credit Program.

In defending the proposal, Robert Doty, Commissioner of the Department of Revenue, said, “I think that what the Governor is proposing is asking those who can do, and who can pay more, to do that, so we can help, for the greater good, our recovery and bring the economy back stronger.”

Senator Carla Nelson, R-Rochester, chair of the committee, expressed concern that the tax increases would drive Minnesotans and their businesses out of the state. “It’s a fact that Minnesota is a progressively taxed state already, so you almost have to discount this statement that ‘pay their fair share’ is some rationale for increasing taxes by over a billion dollars,” she said.