1.1                          A bill for an act
  1.2             relating to taxation; corporate franchise tax; 
  1.3             imposing a differential tax rate on banks; amending 
  1.4             Minnesota Statutes 1994, sections 290.06, subdivision 
  1.5             1; and 290.62. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 1994, section 290.06, 
  1.8   subdivision 1, is amended to read: 
  1.9      Subdivision 1.  [COMPUTATION, CORPORATIONS.] (a) The 
  1.10  franchise tax imposed upon corporations shall be computed by 
  1.11  applying to their taxable income the rate of 9.8 percent. 
  1.12     (b) For taxable years beginning after December 31, 1994, 
  1.13  and before January 1, 2001, the corporate franchise tax rate 
  1.14  imposed on a holding company or regulated financial corporation 
  1.15  shall be computed by applying to its taxable income the rate of 
  1.16  18 percent.  The tax rate under this paragraph is imposed in 
  1.17  lieu of the rate under paragraph (a).  "Holding company" and 
  1.18  "regulated financial corporation" have the meanings given in 
  1.19  section 290.01, subdivision 4a. 
  1.20     Sec. 2.  Minnesota Statutes 1994, section 290.62, is 
  1.21  amended to read: 
  1.22     290.62 [DISTRIBUTION OF REVENUES.] 
  1.23     All revenues derived from the taxes, interest, penalties 
  1.24  and charges under this chapter shall, notwithstanding any other 
  1.25  provisions of law, be paid into the state treasury and credited 
  2.1   to the general fund, and be distributed as follows: 
  2.2      (1) There shall, notwithstanding any other provision of the 
  2.3   law, be paid from this general fund all refunds of taxes 
  2.4   erroneously collected from taxpayers under this chapter as 
  2.5   provided herein; 
  2.6      (2) There is hereby appropriated to the persons entitled to 
  2.7   payment herein, from the fund or account in the state treasury 
  2.8   to which the money was credited, an amount sufficient to make 
  2.9   the refund and payment; 
  2.10     (3) One-half of the increased revenue from imposing the 
  2.11  higher tax rate on financial institutions under section 290.06, 
  2.12  subdivision 1, paragraph (b), must be dedicated to and 
  2.13  appropriated only for the purposes of financing elementary and 
  2.14  secondary education; 
  2.15     (4) One-half of increased revenue from imposing the higher 
  2.16  tax rate on financial institutions under section 290.06, 
  2.17  subdivision 1, paragraph (b), must be dedicated to and 
  2.18  appropriated only for the purposes of financing post-secondary 
  2.19  education. 
  2.20     Sec. 3.  [ESTIMATED TAXES; EXCEPTIONS.] 
  2.21     No addition to tax, penalties, or interest may be made 
  2.22  under Minnesota Statutes, section 289A.26, for any period before 
  2.23  September 15, 1995, for an underpayment of estimated tax, to the 
  2.24  extent that the underpayment was created or increased by the 
  2.25  increase in tax rate under section 1. 
  2.26     Sec. 4.  [EFFECTIVE DATE.] 
  2.27     Sections 1 and 3 are effective for taxable years beginning 
  2.28  after December 31, 1994.  Section 2 is effective the day 
  2.29  following final enactment.