Could Higher Minnesota Tax Collections Mean Cuts in 2016?

Published On: 17th July 2015

From the internet

Everyone loves to hear the words “tax cut” because that means more money in the pockets and less in the state’s coffers.

It is true that tax cuts are on the table for the Legislature next year, as there were some on the table this year that didn’t quite make the cut. Because of Minnesota collecting $555 million more in taxes over a 90 day period than what was predicted by economists, tax cuts could become a reality for those that are counting on them.

Any time lawmakers has more money than expected to dispose of, they have the option of passing it on to the taxpayers and to programs throughout the state that are in need of funds.

In addition to this increase in collections, lawmakers were gridlocked when they adjourned in June with a total of $1 billion in projected revenue not spent.

Lawmakers may decide to spend this money on new programs, tax cuts, construction projects, and they can also tuck it away for when things are not going so well. Nonetheless, lawmakers usually refrain from spending “one-time” money like this on ongoing programs, so it is more likely that the money could be applied to tax cuts and infrastructure improvements.

Although this is great news, it is not known how much money will be collected in the two-year budget that is currently in place. The budget just started on July 1, so it is too early to tell.

Although Minnesota is doing a great job economically, there are some concerns, such as the low iron prices that are having a negative impact on iron mining operations. The U.S. economy was also sluggish the first half of the year, but it seems to recover. Because of poor performance in the first six months, economists lowered their economic predictions for 2015, but they expect an increase for 2016.

But even in the hard times, Minnesota’s economy has grown. There are more opportunities for Minnesotans at various income levels.

The DFL is taking credit for the $555 million, citing Governor Dayton’s policies as the driving force behind it.

However, Republicans have taken a different stance in that they say the surplus is due to the overtaxing of Minnesotans. Being that tax cuts are already on the table for next year, it is expected that Republicans will aggressively push for those cuts since they feel that the Minnesota tax rates that were passed in 2013 were unnecessary.

There are indications that tax cuts could receive bipartisan support since the money is there to give back to the taxpayers of Minnesota.