Minnesota Republicans Propose $13 Billion “Give it Back” Tax Cut Plan

Republicans in the Minnesota Legislature are proposing a $13 billion tax cut plan that includes direct payments, child tax credits, and eliminating the Social Security income tax. The package also includes continued tax breaks for specific tax brackets. According to a report by Twin Cities on February 28, 2023, this proposal follows Minnesota’s more than $17 billion budget surplus report, and House and Senate Republicans named their plan the “Give It Back” tax plan.

Senator Minority Leader Mark Johnson explained that the state government is fully funded and the surplus belongs to Minnesotans. The Republican plan is proposing a version of direct payments that is also supported by Gov. Tim Walz and offers a total of $5 billion in checks of $1,250 for singles and $2,500 for couples. A one-time child tax credit would also be available for two years at a cost of $3.5 billion, which would give an $1,800 tax credit per child under age 18.

The tax cuts would apply to the first- and second-tier tax rates by 1%, lowering the rates to 4.35% and 5.8%, respectively, according to a report by the MNSRC published on March 1, 2023. Moreover, the Social Security tax cut would provide an average of $1,277 in tax relief to 472,902 Minnesotans. However, the state would lose more than $600 million in revenue each year.

Even though Democrats are in full control of state government, minority Republicans may have room to negotiate on taxes. Four Senate Democrats campaigned on the issue of eliminating taxes on Social Security, and with a 34-33 majority, just one Democrat could tip the balance in favor of a tax cut.