Governor Dayton Urges President, Republicans to Abandon Proposal that Would Eliminate Tax Deduction for 900,000 Minnesota Families

Tax proposal from President Trump, Congressional Republicans would eliminate tax deduction for one-third of Minnesota taxpayers, hurting residents in every county (as detailed below)

While 80 percent of the benefits would go to the top 1 percent, 900,000 Minnesota families would lose an average $12,000 tax deduction every year; totaling over $12 billion statewide

ST. PAUL, MN – Today, Governor Mark Dayton called on President Donald Trump and Republican members of Congress to abandon their tax proposal which would eliminate on an average a $12,000 tax deduction for 900,000 primarily middle-class Minnesota families. These tax deductions provide hard-working Minnesota families about $12 billion in tax benefits every year.

The following is a statement from Governor Mark Dayton:

“The US Congress’ Republican Senators and Representatives and President Trump are striking another blow against our country’s future economic prosperity, by cutting taxes, especially for the rich, large corporations, and powerful special interests. Over half of their proposed tax cuts would go to the wealthiest 1 percent of Americans, whose annual incomes total more than $730,000 per year.

“They are trying to say, with straight faces, that their multi-trillion tax ‘reform’ will trigger so much new economic growth that it will largely pay for itself. That premise was shown to be pure fiction, after President Reagan cut taxes in 1981. He caused enormous increases in federal budget deficits, when the promised economic boom failed to appear.

“I was serving in the US Senate, when President George W. Bush perpetrated the same hoax with two enormous tax cuts in 2001 and 2003. President Bill Clinton had spent the previous eight years balancing the federal budget, and forecasts predicted annual surpluses for the next decade.

“President Bush’s huge tax giveaways did not prompt a surge in economic growth; in fact, they were followed shortly by a seismic economic collapse, ‘The Great Recession.’ Those forecasted federal budget surpluses were twisted into massive budget deficits. They have persisted, even during the modest economic growth of the past few years. Last year’s federal budget deficit was $666 billion.

“Those previous fiscal fiascoes should tell us that Congress’ present tax follies will make future deficits even worse and add to the federal government’s debt, which now exceeds $20 trillion. 

“Furthermore, their current tax bill is shamefully biased against lower and middle-class families. In fact, by 2027, the richest 1 percent of Americans would receive nearly 80 percent of the bill’s tax benefits, while lower- and middle-class taxpayers would receive 13 percent. 

“One of their most offensive proposals would eliminate the deductibility of Minnesota’s state income and sales taxes and local property taxes from our citizens’ federal tax liabilities. It would completely remove these important tax deductions, which total over $12.3 billion per year for 900,000 Minnesota families.

“Over one-third of Minnesotans claim those deductions, including 40 percent of the residents in the Third Congressional District, 39 percent in the Sixth Congressional District, and 43 percent in the Second Congressional District. Yet the three Congressmen, who represent those Districts, voted in favor of the House bill. (Note: 20 House Republicans voted against the bill, because eliminating the state and local tax deduction would have harmed so many of their constituents.) 

“I strongly urge President Trump and Republicans in Congress to abandon this and other extremely regressive tax proposals. Any so-called ‘tax reforms’ must do nothing to worsen our nation’s fiscal stability, and be focused on improving the lives and fortunes of low- and middle-income families – not a handful of the super-wealthy.”

Repealing the State and Local Tax Deduction, as proposed by President Trump and the Republican Congress, would disproportionately hurt Minnesotans, because Minnesota is one of the few states that receives less than its taxpayers contribute in federal tax dollars. For every dollar Minnesotans pay in federal taxes, Minnesota receives 90 cents in federal spending. If this tax State and Local Tax Deduction is repealed, Minnesotans would pay more in federal taxes, and have less to show for it.

Who Would Be Impacted: By County

The following county-by-county data shows how many Minnesota taxpayers would be impacted by President Trump’s proposal. This chart includes estimates of the average tax deduction Minnesotans would lose in each county, on average, if the State and Local Tax Deduction is repealed.

Information based on a National Association of Counties analysis of 2015 Internal Revenue Service data.

Permalink: http://mn.gov/governor/newsroom/index.jsp?id=1055-316777

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