TAX SURCHARGE: Dayton says House tax on rich 'goes too far'

TAX SURCHARGE: Dayton says House tax on rich 'goes too far'

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ST. PAUL, Minn. (KMSP) -

Although he has repeatedly campaigned on upping income taxes on Minnesota's top earners, Gov. Mark Dayton said he believes a tax plan proposed by House Democrats goes too far.

In fact, Dayton even suggested the plan was "piling on" the state's wealthiest residents when he spoke against the plan to impose a temporary income tax surcharge on the top one percent.

"I do think it goes too far in increasing the rate on top earners," Dayton said.

Dayton spoke out against the plan after both the Minnesota House and Senate released their two-year budget plans and spending priorities.

BUDGET BREAKDOWN BY CHAMBER

The Minnesota Senate is looking for a spending target of $38.15 billion for the fiscal year 2014-2015. Based on February's revenue forecast, that would increase spending from the current budget by $1.4 billion.

Senate Republicans say the numbers show a trend in spending, saying that the budget tacks on $2.9 billion more than the base budget for the 2012-2013 fiscal year.

In the Minnesota House of Representatives, lawmakers have a spending target of $37.8 billion for the 2014-2015 fiscal year, an increase of $1 billion based on current revenue forecasts.


INVESTMENTS, CUTS SOUGHT

Democrats in both chambers are calling for hefty investments in education, and both budgets placed the single largest spending increase on K-12 schools. The Minnesota House wants to see $550 million allotted, and the Senate followed closely with a proposed $486 million.

Both budgets also call for roughly $250,000 more in funding college education.

When it comes to reducing spending, both the House and Senate budgets call for $150 million less spent on Health and Human Services. Cuts to transportation funding were also sought, with the Minnesota House seeking $20 million in cuts.

 

DEMOCRATS DIFFER ON REVENUE SOURCES

Yet, the question remains: How to pay for it? The cornerstone of Dayton's plan is a new income tax bracket for the top 2 percent of wage earners, but Senate Majority Leader Tom Bakk said that may not be enough.

"What we've kind of talked about -- and I've told the Governor that we're looking at doing some runs on -- are the top 5 percent instead of the top 2 percent, but we'll have to see where the numbers line up," Bakk said.

Earlier this week, House Speaker Paul Thissen announced that Democrats in his chamber also lined up different numbers that resulted in a call for a temporary surcharge on the top one percent -- but Dayton is already signaling that it may be too ambitious.

"I think it's too much," Dayton said. "I'm for taxing high-income earners … but I think my limit is appropriate and I think this one goes too far."

The budget out of the Senate calls for raising $2 billion in revenue, but Republicans argue that none of it is necessary.

"How does putting more taxes on the economy help the economy grow?" asked Senate Minority Leader David Hann. "To me, that's the question that has to be answered -- and this budget doesn't answer that question."

So far, there is no comprehensive tax bill on the table. Sen. Ann Rest, of the Tax Committee, told FOX 9 News she is looking to expand the number of items allowed under the sales tax to lower the overall rate, but Dayton made it clear on Wednesday that he no longer supports expanding any sales tax.

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