MPR: Senate Approves Sales-Tax Rebate

Senate Approves Sales-Tax Rebate
By Martin Kaste
February 8, 1999

The DFL-controlled Minnesota Senate has passed a $1 billion version of Governor Ventura's sales tax rebate plan. Senate Republicans tried to defeat the sales-tax rebate approach, which they call unfair to the state's wealthier taxpayers. The Republican alternative, rebates based on income taxes, has already passed in the House. Senate and House negotiators now have to find a way to reconcile the two plans.

REPUBLICANS HAVE BEEN TRYING TO DAMPEN the political momentum behind Governor Ventura's sales-tax-rebate plan. Given the Governor's high approval rating, it's been a challenge, especially now that Senate DFLers have officially joined forces with the Reform Party Governor on this issue. During floor debate, DFL Senate Tax Chairman Doug Johnson was not shy about invoking the Governor's name.

JOHNSON: The proposal that he brought to the Legislature, and that Senate Democrats are shepherding through this floor today, speaks to mainstream Minnesota, speaks to middle-income taxpayers in this state; this is the best approach with this rebate.

Senate DFLers passed the basic Ventura plan with a few minor changes. It returns about $1 billion to Minnesota residents, whose checks will depend largely on statistical tables of how much sales tax they pay. Those tables are based on taxpayers' income, and Republicans say the plan is just an income-tax-rebate plan in disguise, except that it uses the sales-tax tables to shift more money to lower-income people. Senate Republican leader Dick Day calls it a "grand, socialistic plan, and it cheats wealthier people who pay higher income tax rates".

DAY: What in the world is wrong with giving the billion dollars back to the people who paid it in? Just one time? Give them a break!

Republicans in both houses have been calling the Ventura plan "Robin Hood economics", a label embraced by Mankato DFLer John Hottinger.

HOTTINGER: I don't remember the Robin Hood story real well, but I do remember who the good guy was. And I do remember who was on the side of the people, and I remember who the people supported. and it wasn't the Sheriff of Nottingham. It was Robin Hood.

With the Senate now solidly behind the Ventura rebate bill, the Legislature has to find a way to reconcile two very different plans: his sales-tax rebates and the income-tax rebate bill passed by the Republican-controlled House last week. Senate Tax Committee Chairman Johnson says the differences are so great, he expects the situation requires a summit meeting between House Speaker Sviggum, Senate Majority Leader Moe and Governor Ventura. Ventura's spokesman, John Woodele, says that may happen. Some Republicans agree with this scenario, and they say the only way to resolve the stand-off is to come up with a third way: a completely new tax-rebate plan. Ventura's spokesman, John Woodele, downplays that possibility.

WOODELE: My guess is the governor would not prefer to start over and come at this from a completely new way. If the governor and Senate agree on a plan to get the most money out to the most people, the House ought to take a strong look at this, and come our way.

In other words, it's two against one. Republicans are well aware of the situation, but they think they still have a chance to point out some of the legal weaknesses of Ventura's plan. For one thing, they say the Internal Revenue Service could tax the rebate as income, possibly billing Minnesotans to the tune of $200 million. DFLers have been amending the sales-tax rebate almost on the fly; looking for ways to fix technical holes that leave taxpayers out of the money. Republicans say the whole plan seems jerry-rigged and fiscally unpredictable. The longer the stalemate between the House and Senate drags out, the more chance Republicans will have to look for - and exploit - the cracks in the Ventura plan.

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

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