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Legislative News and Views - Rep. Sondra Erickson (R)

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Legislative Update from Rep. Sondra Erickson

Friday, April 9, 2021

Dear Neighbors,

I hope you had a great Easter and were able to spend time with family and loved ones. The legislature returned Tuesday from its annual, week-long break for Easter/Passover and much of our time was spent in committee as omnibus finance bills have started to be unveiled and moved through the process.

On Monday, Democrats unveiled their omnibus tax bill. The proposal raises taxes by more than $1 billion and fails to fully protect businesses from Paycheck Protection Program (PPP) tax hikes on forgiven loans.

The bulk of the revenue comes from a brand-new 5th tier income tax of 11.15% that would give Minnesota the 2nd highest top income tax rate in the country and directly impact many businesses who have been hit hard during the pandemic. It also caps PPP relief at $350,000, meaning many businesses will still be taxed on forgiven PPP loans that were used to pay employees and keep their doors open during a difficult year. 

Raising taxes in such a dramatic way when the state has a billion-plus budget surplus, billions in the state budget reserves, and is set to receive billions more in federal dollars from the congressional COVID relief bill is reckless and tone-deaf.

The proposed tax increases don’t end with the tax bill as more than $1.5 billion in tax and fee increases are tucked inside their transportation omnibus bill. 

Here is a brief breakdown of some of the tax and fee increases in this bill:

  • A gas tax increase ($363 million over four years) by linking Minnesota's gas tax to the Highway Construction Cost Index. This would result in an automatic annual inflationary gas tax increase.
  • A sales tax increase to fund light rail and other transit ($916 million over four years). Democrats are proposing a half-percent increase in the Metro sales tax. 
  • A Motor Vehicle Sales Tax (MVST) increase ($120 million over four years). 
  • Registration tax increase ($149 million over four years) through changes to vehicle depreciation schedules. 
  • Luxury vehicle registration tax increases ($10.7 million over four years).

Again, such onerous tax increases are completely unnecessary given the state’s current fiscal situation and outlook. Stay tuned for more updates on this as we approach the May 17th adjournment deadline. I will do everything I can to make sure that these tax increases do not become law.

Staying in Touch

Please be sure to reach out to me if you have any questions or concerns. I can be reached by phone at 651-296-6746 or via email at rep.sondra.erickson@house.mn.

Have a good day,

Sondra

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