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Senate Tax Plan To Affect More Than Top 2 Percent

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(credit: CBS)

(credit: CBS)

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MINNEAPOLIS (AP) — The Senate’s soon-to-be-unveiled tax plan will likely affect more than 2 percent of the state’s top earners with an income tax increase, Senate Majority Leader Tom Bakk said Monday.

Bakk, a Cook Democrat, said the plan, set to be released in committee Tuesday, will include a so-called fourth-tier income tax that will be lower and broader than Gov. Mark Dayton’s proposed rate of 9.85 percent. He did not say what that rate for the top earners might be.

Bakk previewed the Senate plan Monday at a University of Minnesota forum with House Speaker Paul Thissen. The House tax plan calls an income tax increase on those making more than $400,000 a year, plus a 4 percent surcharge for two years on incomes over $500,000.

The Senate is also weighing expanding the sales tax to clothing and most consumer services while lowering the overall rate.

“Some people are probably going to lose elections because we are going to raise some taxes,” Bakk said at a University of Minnesota forum. He said some Minnesotans may not take kindly to their taxes being raised, “but sometimes leading is not a popularity contest.”

Unlike the House tax bill, Bakk said the Senate won’t include a controversial increase on alcohol excise taxes.

Thissen said Monday his chamber’s proposal would boost prices by 7 cents a drink. Brewers and alcohol industry insiders contend that’s not the case, and Bakk agrees.

“It’s more than that,” he said.

House and Senate Democrats will eventually have to reconcile the differences between their tax plans in a conference committee after both bills pass. Bakk said some form of a tax increase on top earners and a cigarette tax hike will likely become law this year.

(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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