Greetings!
Estate tax breaks for multi-millionaires – not my priority
This week we heard in Taxes three very expensive bills that would eliminate or phase down the Minnesota estate tax. Only 2 percent of estates - 1100 people - die each year rich enough to pay any of it. While the federal government excludes the first $5.45 million, in 2017 Minnesota excludes the first $1.8 million plus up to $3.2 million for farms and small businesses the heirs continue to run.
We heard from national studies that the accumulation of much of this wealth has never had taxes paid on it – instead it is inherited stocks and other assets that have greatly grown in value that are inherited at the inflated value on death for tax purposes.
While some heirs don’t like to have some of the funds they receive from the work of others reduced, the reality is most of us would be thrilled to get a large inheritance, even if the estate had to first pay some estate tax before distributing the proceeds. One accountant testified that the difference between a $2 million estate and a $5 million one is $300,000 in taxes. I’d gladly accept $300,000 less to accept $2.7 million tax-free. The state’s educated workforce, transportation system, and other taxpayer-funded attributes have contributed to most Minnesotans’ success in their financial life.
Most importantly, this would be very expensive to the state: $75-100 million a year. Think of how much that could reduce the cost of higher education tuition, support kids statewide in early childhood programs, meet the needs of our growing population of seniors, or reduce property taxes. I think investing that money in programs that benefit lots of residents would pay off long-term much more than helping 1100 very rich families in the hopes that they use the money to promote economic growth.
The tradition in Tax Committee is not to vote most bills up or down on first hearing them. Instead they are “laid over for possible inclusion” in the final tax budget bill. But the Republicans scheduling this as the first topic of budget consideration sends a signal about their priority.
Bipartisan Federal Tax Conformity Bill (HF2) Passed into Law
The bill I described last week was signed by the Governor today so that the forms and computer programs for tax filing for 2017 will be up to date when tax season starts at the end of this month. It’s an example of fast-tracking for reasons that benefit the public with bipartisan partnership.
Health Insurance Relief moves forward but road blocks remain
This, unfortunately, is an example of fast-tracking bills without bipartisan partnership and adequate focus on the impact on the public. As I described last week, there is bipartisan agreement on getting relief to the 125,000 people buying individual coverage that have faced huge increases this year. But it’s been coupled with permanent “reforms” that aren’t analyzed, could destabilize the small business employer market, and deserve significant, thoughtful consideration and analysis.
When there weren’t enough votes to suspend the rules and pass it without hearings, the Republicans split the bill into multiple separate bills introduced on Monday so that they could be heard on Tuesday in overlapping hearings. This really was “going through the motions,” not thoughtfully engaging the public, the industry, and experts. In fact, I was told some hearings didn’t take public testimony. We will be asked to consider this finally next week with assurances that a conference committee will look at the issues in more depth.
It’s a sad example of what happens too often; gamesmanship that’s more focused on having a “win” than doing the tough work of legislating: studying issues and hearing from the public and experts and working together to “get it right” before passing it into law.
There’s also a side skirmish about how to administer the rebates. For a one-time program, we don’t need to create a new set of bureaucratic and IT system costs (for up to $20 million) when the health plans can just reduce the monthly premium bill by the rebate and bill the state for the difference.
It’s frustrating to see relief delayed for families still trying to find affordable private insurance before the deadline of January 31. As the Star Tribune editorial said today, we should pass that cleanly and then carefully consider the major permanent reforms. The reforms proposed would impact most people’s insurance, not just the 125,000 targeted for fiscal premium relief.
Overview hearings start the Session
Most committees are having overview hearings now when the non-partisan staff and state agency leadership brief the committees on their areas of responsibility, emerging issues, budget challenges and the formulas and policies that guide state actions and funding. This week, I heard about our property tax system and its trends, public health issues, and challenges facing health and human services. They touched on the growing issue of opioid addiction, the health disparities based on socioeconomic differences and race, the growing demand for mental health services, and increasing reports of child and vulnerable adult abuse. As we go into these items in more depth, I’ll share some insights.
Stay warm in this last arctic blast and start savoring the lengthening of the days. Have a good week!
Diane