1.1 	A bill for an act
1.2 	relating to taxation; imposing a surcharge on
1.3 	individual income tax liability; amending Minnesota
1.4 	Statutes 2004, sections 290.06, by adding a
1.5 	subdivision; 290.0675, by adding a subdivision.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 290.06, is
1.8 	amended by adding a subdivision to read:
1.9 		Subd. 2g.Temporary income surcharge. (a) In addition to
1.10 	the tax computed under subdivision 2c and section 290.091, a
1.11 	surcharge is imposed on individuals, estates, and trusts.  The
1.12 	surcharge equals the following rate multiplied by the tax under
1.13 	subdivision 2c and section 290.091:
1.14 	(1) for taxable years beginning after December 31, 2004,
1.15 	and before January 1, 2006, ... percent;
1.16 	(2) for taxable years beginning after December 31, 2005,
1.17 	and before January 1, 2007, ... percent;
1.18 	(3) for taxable years beginning after December 31, 2006,
1.19 	and before January 1, 2008, ... percent; and 
1.20 	(4) for taxable years beginning after December 31, 2007, 0
1.21 	percent.
1.22 	(b) By October 1, 2006, the commissioner of finance shall
1.23 	estimate the amounts that will be available at the close of the
1.24 	biennium in the state's (i) unrestricted general fund balance,
1.25 	prior to the transfer of any amounts to designated funds or
2.1 	accounts, (ii) budget reserve account, and (iii) cash-flow
2.2 	account.  If the sum of these three amounts is greater than
2.3 	$1,000,000,000, the commissioner shall reduce the rate of the
2.4 	surcharge under this subdivision in effect for the following
2.5 	taxable year so that the amount of revenue raised by the
2.6 	surcharge and all other general fund revenues results in an
2.7 	unrestricted general fund balance, budget reserve account, and
2.8 	cash-flow account at the close of the biennium of no more than
2.9 	$1,000,000,000.  The rate must be rounded to the next one-tenth
2.10 	of one percent.  No adjustment is required if the change in the
2.11 	rate of the surcharge would be less than one-tenth of one
2.12 	percent.
2.13 	
EFFECTIVE DATE. This section is effective for taxable
2.14 	years beginning after December 31, 2004.

2.15 	Sec. 2. Minnesota Statutes 2004, section 290.0675, is
2.16 	amended by adding a subdivision to read:
2.17 		Subd. 6.Adjustment for surcharge. The credit allowed
2.18 	under this section is increased by the percentage rate of the
2.19 	surcharge in effect for the taxable year under section 290.06,
2.20 	subdivision 2g.  This increase is applied before the adjustment
2.21 	under subdivision 4.
2.22 	
EFFECTIVE DATE. This section is effective for taxable
2.23 	years beginning after December 31, 2004.