Bye-bye, B2B taxes and maybe the 'marriage tax'
Statement from Dayton on today's budget surplus forecast:
"Today’s new Budget Forecast, projecting an additional surplus of over a billion dollars during the current biennium, is great news for Minnesota. The principal reason for this dramatic improvement is the stronger-than-expected growth of our state’s economy.
That credit belongs, first and foremost, to the people of Minnesota – to the businessmen and women, who reaffirmed their commitment to our state, by expanding their businesses and adding 123,000 jobs here during the past three years, and to their hard-working employees, who made those business expansions successful.
Credit is also due to the Legislature and my administration, for setting a course of fiscal responsibility and sticking to it. In 2011, legislative leaders and I made permanent reductions in state spending of two billion dollars.
Last spring, the new legislative leaders and I continued those spending cuts, raised new revenues, primarily from our state’s wealthiest citizens and largest corporations, and invested most of it in education – from early childhood, to all-day kindergarten, to college tuition freezes.
Critics claimed that this balanced fiscal approach would have "a chilling effect on Minnesota’s economy." Today’s Forecast proves those critics wrong. If fact, it will be amusing to watch some of the people, who were criticizing Minnesota’s economy yesterday, claiming credit for it today!
We have used our strong economic growth to pay back all of the 2.8 billion dollars previously borrowed from our schools. Thanks to the insistence of the DFL majority in the House of Representatives, today’s Forecast will trigger the immediate repayment of the final 246 million dollars we owe our schools.
It will also permit the elimination of yet another left-over gimmick, 15 million dollars owed the Airports Fund.
Which will leave $825 million remaining from the $1.086 forecasted balance. This news will no doubt launch a blizzard of legislative proposals to reduce taxes and increase expenditures.
There will be another Budget Forecast in just three months, which will update today’s projections. I will await that forecast before I submit my proposed budget revisions to the legislature.
If this forecast holds, however, I expect to propose the elimination of all three B2B taxes, effective April 1, 2014, at a cost of $231 million for the biennium. My other priority is a tax cut for middle-income Minnesotans by, for example, conforming to all of the federal tax cuts, which would cost about $205 billion for this biennium. That would include eliminating the marriage penalty, which would reduce state taxes for 640,000 Minnesota taxpayers.
It would also include increasing the working family credit, which would lower state taxes for 53,000 taxpayers.
These two tax cut packages combined would total $436.4 million, still leaving $388.6 million for other purposes. I do not expect to make other specific proposals until after next February’s forecast."