Fact Check: Walz accurately describes Jensen's income tax cut, though he's backed off some elements

(FOX 9) - Gov. Tim Walz accurately says Republican rival Scott Jensen's plan to eliminate the state's personal income tax would primarily benefit wealthier people like Jensen, though how Jensen would pay for the tax cut isn't clear, a FOX 9 Fact Check finds.

Jensen has proposed phasing out the tax over several years, getting halfway there in a four-year term if he's elected. Nine other states don't tax individual income.

"He made the proposal that he wants to remove the income tax, which the bulk of that would go to millionaires like himself," Walz said during Tuesday's debate. Walz's campaign since launched a television ad making a similar claim.

Minnesota has a graduated income tax, which carries a 5.35% rate for the lowest tax bracket but reaches 9.85% for married couples that make more than $284,810 a year. Those in higher tax brackets would therefore have the most to gain from eliminating the tax, though everyone who pays income taxes would see some benefit.

Jensen has not released his tax returns during the campaign despite calls from Walz to do so. Wednesday, he confirmed to FOX 9 that his net worth exceeds $1 million.

Backfilling lost revenue

The income tax generated $14 billion in revenue during the most recent fiscal year. Jensen has given a variety of answers on how he'd backfill that but has not released a detailed proposal.

He's backed a half-cent sales tax increase. The Star Tribune reported that, in an interview, Jensen floated a tax on clothing and food. More recently, Jensen has backed away from supporting a sales tax increase of any kind.

"I don't see any sales tax increase," he told reporters Tuesday night. "What I see is an opportunity to have a conversation that we haven't had in decades."

The sales tax netted $6.2 billion in revenue during the most recent fiscal year, so a half-cent increase wouldn't come close to replacing lost income tax revenue. Jensen has predicted that eliminating the income tax would drive economic growth, juicing sales tax collections.

He has also proposed budget cuts of 5-10% for state agencies, though he has not detailed a list of specific cuts. Jensen has criticized the size of Walz's budget proposals, including a $4 billion spending deal Walz agreed to in principle with the divided state Legislature this year that never passed.

Walz takes credit for tax cut

Walz's latest ad contrasts Jensen's income tax plan with the governor's own economic record, but the ad doesn't give voters the whole picture.

"We passed the largest middle class tax cut in 20 years," Walz says in the ad, echoing statements he's made in the past.

In 2019, Walz signed into law a tax bill that cut the state's second-tier income tax rate from 7.05% to 6.8%. The tax cut was modest -- a married couple earning $100,000 a year would save about $150 -- but it was the first time Minnesota cut its income tax since 1999.

Senate Republicans were the first to propose the second-tier rate cut. Walz's own budget proposal included a series of tax credits and a 20-cent per gallon gas tax increase.

When the tax bill came up for a vote in the Senate during the 2019 special session, it passed 52-15. Jensen, then a state senator, voted yes.

FOX 9 Fact Check: Here's our rating system

• True: accurate information that requires little or no additional context
• Needs clarification: mostly accurate information that leaves out context that would be helpful to voters
• Not the whole story: the information presented leaves out a significant amount of context that could lead voters to a different conclusion
• Misleading: partial information presented in a way that misleads voters
• False: inaccurate information, or information presented out of context

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