Minnesota GOP legislators propose tax plan that includes rebate checks they once criticized

Republican legislators last year blasted DFL Gov. Tim Walz's proposal to send rebate checks to Minnesotans, often labeling it an election-year gimmick.

Now in the minority, GOP members of the House and Senate have reversed course and said that's exactly how the Legislature should spend some of the state's massive $17.5 billion surplus.

The legislators held a news conference Tuesday to propose their "Give it Back" tax relief plan, which includes sending rebate checks of $1,250 to individuals and $2,500 to joint filers. The rebate proposal would cost $5 billion and have no income limits, meaning all Minnesotans would receive one.

"It was never that we were opposed to any type of a one-time refund, but we felt that it needed to be part of a larger package to present to the people with meaningful tax reform as well," said Sen. Bill Weber, R-Luverne, the GOP lead on the Senate Tax Committee.

During a news conference Monday, Walz criticized Republicans for being late to support the proposal. Under his rebate plan, individuals earning up to $75,000 a year would get $1,000 while couples who file jointly and earn up to a combined $150,000 would receive $2,000.

"Republicans are going to do a press conference on 'give it back.' Well, join the crowd. That's what we've been saying since last year," Walz said.

"The question is, we want to give it back to working Minnesotans to make a difference for the future rather than giving it to the wealthiest Minnesotans."

With Democrats in control of the House, Senate and governor's office, Republicans likely will not have much influence on potential tax bills. But they could find an ally in Walz on the issue of rebate checks, since DFL legislative leaders have been cool to the proposal.

The GOP tax plan, which would cost $13 billion over the next two years, includes $3.5 billion for a one-time child tax credit that would be available for two years. The tax credit would provide $1,800 for each child younger than age 18.

The plan also would eliminate the state tax on Social Security. The state Revenue Department estimates that would benefit about 473,000 Minnesotans who would see an average $1,276 in relief. Minnesota is one of 11 states that tax Social Security income.

The GOP plan would also lower both the state's first- and second-tier income tax rates by 1 percentage point — a permanent cut that would cost $3 billion.

"As the majority has brought through their priorities, tax relief has not been one of them," said House Minority Leader Lisa Demuth, R-Cold Spring. "With over $17.5 billion, if we don't give tax relief to Minnesotans now, when would we?"

Walz is also proposing child care tax credits and child tax credits, and House Speaker Melissa Hortman of Brooklyn Park has said House Democrats want to see those credits as well.

DFL senators, who hold a one-seat majority, have been divided on whether to eliminate the Social Security tax or to end it for just some recipients.

"We are having conversations among our whole caucus of 34, and we will continue to do that," said Senate Majority Leader Kari Dziedzic of Minneapolis.

She said party leaders are working to get all Senate Democrats on board with a partial repeal of the tax — the approach that she and Walz support.

Senate Minority Leader Mark Johnson of East Grand Forks said Republicans on the Tax Committee have "tried to bridge the aisle" and talk with new DFL legislators who support the full Social Security tax repeal.

"This is a bill that allows money to go back to especially those people who are the most vulnerable who are using those benefits," Johnson said. "If we can get that through, that would really be a wonderful thing for the state."

The rebate check proposal did not progress far in the DFL-led House last session, but Hortman indicated Monday that she is open to a reframed approach. House support for the checks depends on how they are structured, she said, suggesting repackaging them "as an advance child tax credit."

"We certainly share the governor's objective of reducing child poverty in Minnesota," Hortman said.