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Tax debate heats up at Capitol
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Several hundred protesters gathered at the Capitol to speak out against program cuts in the state budget. (MPR Photo/Laura McCallum)
On the deadline for Americans to file their taxes, the tax debate heated up a notch at the Capitol. Several groups used Tuesday's filing deadline to either call for tax increases or argue for holding the line on taxes. At the same time, the House is moving quickly to approve budget bills that conform with Gov. Pawlenty's no-tax-increase pledge.

St. Paul, Minn. — A couple hundred people gathered on the Capitol steps for what was billed as a "Tax Day Protest and Rally".

Groups ranging from labor unions to the Welfare Rights Committee say lawmakers should balance the state budget by raising taxes on the wealthiest Minnesotans. They say Gov. Pawlenty's budget cuts services for the poor, while preserving the tax cuts of the last few years.

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Image Sen. Linda Higgins, DFL-Minneapolis

Sen. Linda Higgins, DFL-Minneapolis, told the crowd to take their message to House Republicans. "When you leave this rally, go across the street to the State Office Building and get to work talking to those folks who want to make sure that their rich friends don't have to help at all deal with this budget deficit."

Higgins and other Senate Democrats want to create a new top tax bracket for upper-income earners. The Senate DFL budget plan would also raise the state's cigarette tax by a dollar a pack, and eliminate unspecified corporate tax loopholes.

"Every budget solution for the Democrats consists of tax increases," countered the chairman of the state Republican Party, Ron Eibensteiner, who says raising taxes will further stifle economic growth. He says many Minnesotans who agree with Gov. Pawlenty's no-tax-increase pledge don't have time to come to Capitol rallies.

Instead, Republicans staged an alternative to the event on the Capitol steps. They brought around a volunteer dressed as "DFL Taxman," who planned to go to the Post Office and ask tax filers to voluntarily contribute to fixing the state's $4.2 billion deficit.

Eibensteiner says the tax filing deadline is an unpleasant reminder that Minnesota's tax burden is too high. "For Democrats, it's a good day; they like a tax day. But for Republicans, who believe in smaller government and making sure that people get to keep more of their hard-earned dollars, it's not a particularly happy day."

Republican leaders in the Minnesota House are working to pass budget bills that don't raise state taxes. But another bill sponsored by a House Republican would raise the state's cigarette tax.

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Image For a cigarette tax increase

Rochester Republican Fran Bradley wants to increase the state's cigarette tax by $1 a pack, generating an estimated $260 million a year. He would use that money to eliminate the state's provider tax on doctors, hospitals and clinics.

Doctors and anti-smoking advocates are urging lawmakers to raise the cigarette tax. Dr. David Klevan of the Minnesota Smoke-Free Coalition says polls show a majority of Minnesotans support an increase in the cigarette tax.

"We know through research and experience that a cigarette tax increase will save lives, reduce smoking -- especially among kids -- and reduce health care costs. Put simply, cigarette taxes are smart public policy," he said.

Gov. Pawlenty says he doesn't consider Bradley's bill a tax increase, because it uses money from the cigarette tax to offset another tax. But the governor says he won't support DFL proposals to raise taxes to help balance the budget.

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