Republicans attack Dean Phillips' business background in new TV ads as he competes for Rep. Erik Paulsen's seat

Republicans are targeting Dean Phillips' business background and wealth as the first-time Democratic candidate challenges Rep. Erik Paulsen for his seat in Congress.

On Wednesday, both the Congressional Leadership Fund, a super PAC associated with House Republican leadership, and Paulsen's campaign released new TV ads singling out Phillips for saying health care is a "moral right" while not initially offering it to employees at his Minneapolis coffee shop. Phillips' campaign called the ads "misleading."

The Congressional Leadership Fund's ad — its first one specifically for the Third Congressional District — calls out Phillips for "the worst kind of hypocrisy" for the health insurance issue even though the business owner is worth up to $77 million, the ad says.

Paulsen's campaign ad took a similar message, adding that Phillips inherited millions and failed to pay business taxes on time, calling him "dishonest" and a "shady businessman."

In response, the Democrat's campaign said Phillips and his business partners didn't have any full-time employees when they launched Penny's coffee shop in 2016; instead, they chose to pay part-time employees a $15 minimum wage so they could afford to choose their own plan through the Affordable Care Act. As the business grew to have full-time employees, he offered a health care plan that pays 50 percent of the premium.

"To attack any small business owner, candidate or otherwise, for struggling to afford healthcare benefits while at the same time voting to systematically erode coverage and raise costs for millions of Americans is reprehensible," Phillips' campaign said in a statement.

Phillips, whose great-grandfather started Phillips Distilling, also helped lead Talenti Gelato, which incurred an $89 interest charge for late property taxes — also fodder for an attack in Paulsen's ad. Phillips said in a statement that employees at both businesses received full benefits and profit-sharing.

Last year, the Congressional Leadership Fund opened its first field office in the country, in the Third District. Super PACs can raise and spend unlimited amounts of money on behalf of candidates but aren't supposed to coordinate with campaigns.

The Third District race is shaping up to be one of Minnesota's most expensive this year.