Tax bill passes first hurdle

04/12/2006

Includes higher business taxes, lower property taxes

BY PATRICK SWEENEY
Pioneer Press

Minnesota businesses would pay significantly higher taxes, and many homeowners probably would receive significant property tax relief, under a bill approved Tuesday by the Senate Taxes Committee.

The bill also would provide about $60 million a year for new affordable housing for low-income people by raising the deed taxes levied when homes and businesses are sold.

But, like a House property tax rebate plan announced Monday, the provisions in the Senate tax bill are a long way from becoming law.

So far, members of the Senate Democratic-Farmer-Labor majority have not endorsed the Senate bill, which was largely crafted by Taxes Committee Chairman Larry Pogemiller, DFL-Minneapolis. If the Democrats eventually support the bill and it is passed by the Senate, the measure will face strong opposition from the Republican House majority and a possible veto from Republican Gov. Tim Pawlenty.

Sen. Bill Belanger of Bloomington, the senior Republican on the Taxes Committee, predicted both the House and Senate might fail this year to deliver on the tax relief that legislative leaders have promised.

“What could happen is no bill,” Belanger said.

The Senate bill would boost corporate taxes by about $160 million by eliminating tax breaks for companies that have significant foreign operations. It also would raise business property taxes by about $44 million next year and by much greater amounts in subsequent years. Pogemiller advocated both proposals last year, but neither became law.

Revenue from the business tax increase and money from a tax relief account would be used to give married couples the same break on state income taxes that they now can claim on their federal taxes. The money also would be used to significantly increase state aid to schools, cities and counties, allowing the local bodies to cut property taxes