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Legislative News and Views - Rep. Jeff Howe (R)

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Happy Fourth; tax changes in effect

Wednesday, July 3, 2013

Dear Neighbor,

 

The Howe family wishes you and your family a safe and happy Fourth of July.

 

Independence Day carries deep personal meaning for many of us when we think about the incredible sacrifices previous generations made for our freedom … and many Americans continue to make today. Sometimes we get caught up in the daily grind, but let’s take time this week to think about how good we really have it. Our nation is the greatest our world has ever seen and I look forward to celebrating our independence with friends and family.

 

On another note, many of the $2.1 billion in tax increases and hundreds of millions more in fee increases Gov. Mark Dayton and the legislative majorities passed this year took effect July 1.

 

Key changes include online purchases, a new fourth-tier income tax rate, increased cigarette taxes and increasing taxes on businesses. New fees – including those on driver’s licenses and vehicle registration – also went into effect.

 

Here is an overview:

 

Income taxes

The new 9.85 percent rate on the state’s high-income earners impacts:

  • married people who file jointly with a taxable income of more than $250,000;
  • married people who file separately with a taxable income of over $125,000;
  • heads of household with a taxable income of over $200,000; and
  • single filers making over $150,000.

 

Sales taxes

Taxes on a pack of cigarettes rose by $1.60 (from the current $1.23 to $2.83).

  • Other tobacco products will also be taxed at higher rates, including taxing “little cigars” as cigarettes and taxing each container of “moist snuff” at the same rate as a pack of cigarettes or 95 percent of the wholesale sales price, whichever is higher.

 

Vikings stadium bailout

Part of the revenue from the first year of the cigarette tax increase will be used to make up for the failure of electronic pulltabs to meet revenue projections to fund the state’s commitment to a new Minnesota Vikings stadium.

  • To prevent retailers and wholesalers from stockpiling product before that date, a one-time new cigarette tax equal to the tax increase will be imposed on current inventories. That is expected to raise $32.4 million, of which $26.5 million will go to the special fund used for the stadium.

 

Online taxes

A sales tax also was added for online purchases such as ringtone downloads, music, videos, books and online computer games.

  • Digital  textbooks required for college courses will receive exemptions.
  • Additional revenue for the stadium, if needed, will come from corporate tax increases on revenue from sales in the state.

 

Business taxes

Businesses pay new sales taxes on warehousing and storage (not including mini-storage); electronic and commercial equipment repair and maintenance; and repealing the current sales tax exemption on telecommunications equipment purchases.

  • The new taxes on warehousing and storage are not scheduled to be imposed until after March 31, 2014.

 

DMV fees

New fee increases are in place on driver’s licenses and vehicle registration.

  • The option of a $5 wheelage tax has been expanded to include all 87 counties in Minnesota, with the amount increased to $10 in 2014 followed by up to $20 beginning in 2018.
  • New law also increases a flat amount charged for some older model collector vehicles (from $90 to $150).
  • Starting in 2017, fees for new vehicle titles will increase from $6.25 to $8.25, while a $5.50 title transfer fee is eliminated.
  • The filing fee for a new or renewed driver’s license or state identification card is increased from $5 to $8.

 

God bless America and good luck,

Jeff