Some 367,000 Minnesota seniors have a stake in a tax-cut debate going on at the Capitol this week.

The Republican-controlled House wants to phase out income taxes on all Social Security income. The Senate Democratic-Farmer-Labor majority opposes that tax break as a threat to the state’s future fiscal stability.

The outcome of that dispute rests in the hands of five senators and five House members who serve on a conference committee that is trying to split the difference between the $2.2 billion in tax cuts the House approved and the $268 million in tax relief offered by the Senate.

As they headed into negotiations Tuesday, both sides were adamant about their positions.

“Exempting Social Security income is a great benefit for our seniors on fixed incomes, not having to pay so much to government and being able to keep more money for themselves,” said House Tax Committee Chairman Greg Davids, R-Preston.

“Anytime we can reduce the tax burden on the middle class, especially fixed-income people, I think that’s the right thing to do. … It’s a top-tier issue for me.”

His Senate counterpart, Tax Committee Chairman Rod Skoe, DFL-Clearbrook, responded that, when fully implemented, eliminating taxes on Social Security income would cost the state treasury nearly $500 million a year. Not only would that make it harder to balance future state budgets, he said, but that large a price tag would threaten the state’s ability to increase funding for education and other government services.

After scrambling in recent years to erase budget deficits, “pay back shifts” and tuck away some money in a rainy-day budget reserve, Skoe said, “We’re not interested in anything that’s going to have a long-term negative (impact) on the state budget.”

DFL Gov. Mark Dayton shares that view. “We have significant concerns about the long-term costs” of exempting Social Security income from taxes, said state Revenue Commissioner Cynthia Bauerly.

Skoe also asserted it’s only fair that seniors help pay for schools and other services for their children and grandchildren. “We’re all in this together,” he said.

Davids sees it differently. “I think every Minnesotan pays more than their fair share, including seniors,” he said.

Minnesota is one of just seven states that tax Social Security income at the same level as the federal government, according to the nonpartisan Minnesota House Research Department. Thirty-eight states do not tax Social Security benefits.

Nine of them, including South Dakota, have no income tax, and 29 other states, Iowa and Wisconsin among them, exempt all Social Security income from taxation.

In Minnesota, low-income seniors are already exempt from paying taxes on Social Security benefits. Those with higher incomes pay at progressively higher rates.

A retired single person with a total income of less that $32,542 and a retired couple with income under $44,390 pay no taxes on their Social Security benefits, House Research reported.

A single retiree with an income between $32,542 and $41,542 would pay taxes on 50 percent of his or her Social Security benefits, as would a couple with an income between $44,390 and $56,390.

Retired filers earning more than those sums would pay taxes on 85 percent of their Social Security income.

Skoe said 15 percent of their income is exempt because the government assumes they paid taxes on that amount during their working years.

The debate over taxing Social Security benefits has been around for years, and if lawmakers don’t resolve it this year, it’s almost certain to resurface in the future.

Follow Bill Salisbury at twitter.com/bsalisbury.