MINNEAPOLIS (WCCO) – The stage is set for a tax showdown at the state Capitol.

Republicans in the Minnesota House passed a sweeping $2 billion tax relief plan on Wednesday that they say is sharply focused on middle class taxpayers.

But it’s far from anything Democrats are proposing, or what Gov. Dayton says he’ll accept.

Now that Minnesota has a record $2 billion surplus — after years of deficits — there’s only one question: Give it back, or pay it forward?

The centerpiece of the plan is a phase-out of the state’s business property tax and a temporary $1,000 income tax exemption.

Republicans say giving the surplus back to taxpayers restores balance.

“Since the year 2000, our hardworking Minnesotans have had their wages increased 12 percent,” Rep. Denny McNamara, R-Hastings, said. “Sadly, our state government has grown at the same time at 75 percent.”

For a family of four earning $50,000, the exemption means a $282 tax cut. For singles, it’s about $70. But it goes away after two years, while the business tax cuts are permanent.

“What that is going to mean is that we are going to be right back again to cutting schools, to cutting hospitals, to cutting nursing homes,” Rep. Paul Thissen, the DFL minority leader, said. “We’re going to be right back again to 2011.”

The phase-out of the statewide commercial business tax would affect places like the Sunrise Cafe in Malmo, which supporters said will get a $4,200 property tax cut every year.

But Democrats say businesses get the biggest piece of the property tax pie, by far.

“In the face of a $2 billion surplus, the House GOP can find a billion-and-a-half dollars in the next four years for business tax cuts, and not a dime for middle-class Minnesotans,” Rep. Jim Davnie, DFL-Minneapolis, said.

The Democrats in the Senate have a bill with only a fraction of the tax relief Republicans are proposing, but they are putting much more money into a budget reserve.

No one’s getting “Jesse checks.”

Pat Kessler

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