MPR: Ventura Unveils Tax Rebate Plan

Ventura Unveils Tax Rebate Plan
By Martin Kaste
January 14, 1999

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Governor Ventura has proposed a sales tax rebate plan, which he says will get more money to the middle class than the House Republicans' income tax rebates would. Republicans say they'll keep an open mind, but they don't like the limits Ventura is putting on the size of rebates for wealthy Minnesotans.

GOVERNOR VENTURA HAS ALWAYS SAID the budget surplus should go back proportionally to the taxpayers who created it, but this new tax rebate seems to amend that philosophy. Now Ventura says there should be a tighter cap on the size of the rebate checks for the wealthy.

Ventura: As a person who, at times, has been on the high end of the income scale in my career, I could live with it. I could live with a cap on what I get back, and I could live with it going to some people who are participating, and deserve to take part in this rather than getting a big fat goose egg.

Ventura's plan is designed to return about 35% of the state sales tax paid by Minnesotans over the past two years. The state has no way of knowing exactly how much anyone spends in sales tax, but it can estimate the amount based on income levels. The Ventura administration says this approach will return $764 dollars to a family of four that earns $50,000. When compared to the Republican income tax rebate plan, Ventura's approach diverges the most in the way it treats the rich and the poor.

Ventura: If you're retired and you're spending every dollar of social security income to live on, you don't get anything. In my plan, at least it will be addressed somewhat to those people in a way that is fair to them.

Ventura guarantees low-income households a minimum rebate of $384. The Republican income tax rebate plan gives nothing back to people who don't pay income tax. At the other extreme, Ventura caps the rebate for the richest Minnesotans at $2,000; the Republican cap is $7,600. It's part of the Ventura plan that doesn't go down well with House Speaker Steve Sviggum.

Sviggum: Government is not about redistributing income. That's not the purpose of government. We have some programs in government to help needy people. I don't think you can argue from a socialistic attitude, which might be where Mr. Moe and Mr. Ventura are coming from, that the tax program ought to be about redistribution as well.

Democrats are rushing to embrace Ventura's plan. It's not exactly the property tax rebates they usually prefer, and which they believe help low-income Minnesotans the most, but they like the sales tax rebate a lot better than income tax rebates. Senate Majority Leader Roger Moe has been especially quick to join Ventura's side.

Moe : I think the debate has ended on which kind of rebate it's going to be. It's going to be Ventura's rebate process. That's what it's going to be.

Politically, Moe and Ventura have out-flanked the House Republicans. But Republicans still hope to keep their income tax rebate plan alive by subjecting the sales tax rebate plan to closer scrutiny, and exposing what they believe are fundamental flaws in the Ventura plan.

Sviggum: Both bills will be heard in committee. Hopefully we will have a few more facts as to whether the thresholds of the IRS are met or not. Hopefully, we'll have a little more information as to the distribution of the dollars, and the mechanism. But we're planning to bring up both plans in a dual-track process, which I think is fair to the governor.

Sviggum and other Republicans say they're worried the Internal Revenue Service will decide to tax the sales tax rebates as regular income. They say the Ventura rebates could turn into a mess of back taxes, penalties and paperwork for Minnesota taxpayers. Ventura's advisers say they're confident the IRS will not tax the rebates.

Republicans have opened the door to a compromise with the Governor. Some say they'd accept the Ventura sales tax rebates if he also signs on to deep cuts in permanent income tax rates. Ventura says he believes in cutting the rates, but he might not be willing to go as far as Republicans hope.

Ventura: We need to keep up the pressure for permanent tax relief but, again, we have to be prudent. We have to be careful in tax relief so that we don't do a knee-jerk reaction, make a bunch of big cuts, and then , two years from now, we're looking at a big deficit again.

Ventura's staff is still putting the final touches on his tax rebate bill, and House Republicans have promised to introduce it alongside their bill in the House Taxes Committee next Tuesday.

Martin Kaste covers the Capitol for Minnesota Public Radio. You can reach him at mkaste@mpr.org.

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