ST. PAUL - The federal overhaul of the tax code that Congress approved in December could have serious consequences for Minnesotans depending on how state leaders react to the changes.
In exchange for cutting tax rates and doubling the standard deduction for individuals and families, Congress modified or eliminated many popular credits, exemptions and deductions.
If Minnesota lawmakers do nothing, the state's tax laws will be vastly different than the new federal rules, complicating filers' returns. If Minnesota strictly conforms to the federal changes, some residents could see an increase in their taxes.
State lawmakers agree the most palatable response lies somewhere in the middle. Exactly what it looks like will be the subject of much debate over the next few months.
Republicans say they want to simplify the state's code without raising taxes.
"Conformity by itself is a huge tax increase on Minnesotans," said House Speaker Kurt Daudt. "My goal would be to try to hold people harmless in this bill."
Democrats say that will be tough to do. They want to make sure any changes benefit the middle class.
"I think making it as equitable as possible, especially for working Minnesotans, is really crucial," Gov. Mark Dayton said.
Whatever consensus emerges, it will likely need bipartisan support in the Senate, where Republicans hold a one-seat majority.
Another factor will be whether the state again projects a budget surplus. After a couple of months of fretting over lower-than-expected state revenue forecasts, lawmakers from both parties are hopeful the state's coffers will once again be flush.
If they are, there's sure to be a debate on what to do with that money - give it back through tax breaks or spend it on state programs.
The St. Paul Pioneer Press is a media partner with Forum News Service