Saint Paul, Minnesota – The Minnesota House of Representatives passed the conference committee report on the Omnibus Tax Bill. The bill balances the budget honestly, provides property tax relief and funds strategic investments in education and job creation. State Representatives John Ward (DFL – Baxter) and Joe Radinovich (DFL – Crosby) voted for the legislation.
“After a decade-long roller coaster of deficits, shifts, and gimmicks, this bill responsibly funds a balanced budget into the future,” said Rep. Ward. “We made a commitment to honestly stabilize our budget and we’re accomplishing that today.”
The bill provides $400 million in middle-class property tax relief for Minnesotans through the Homestead Credit Refund, retooled renters’ credit and increased aid to cities and counties.
The Homestead Credit Refund provides universal, targeted property tax relief to middle-class homeowners. Under this program, more than 300,000 homeowners (75% of filers) will see a refund increase. More than 100,000 additional homeowners will be eligible for a refund. Homeowners will be notified if they are eligible for a refund over $1,000 and the average homeowner will see their refund increase by $212.
The previous Legislature raised property taxes on renters who earn less than $55,000 a year by cutting the Renter’s Credit. This provision enhances the Renters’ Credit, providing property tax relief to Minnesota renters (including elderly and disabled renters), so that the neediest renters see the greatest benefit. Under the improved Renter’s Credit, 66,000 filers will see a bigger refund, 10,000 additional renters will qualify, and the average renter will see their refund increase by $179.
The bill also increases Local Government Aid by $80 million and Country Program Aid by $40 million. Cities and counties will join townships in receiving a sales tax exemption on most purchases.
“This is great news for Greater Minnesota where property taxes have increased eight times more than in the metro, and Greater Minnesota business taxes have increased three times more than the metro,” said Rep. Radinovich. “We promised the people of Minnesota that we would make property tax relief a top priority and we’re getting the job done.”
The budget replaces the existing capital equipment sales tax refund with an exemption at the time of purchase. The exemption applies to businesses when they purchase equipment used for manufacturing, fabrication, mining or refining. The move frees up capital for business investment. Rep. Radinovich was the chief author of this provision in the House.
“This is common-sense tax reform that will help our small businesses,” added Rep. Ward. “Instead of equipment refund months later, our budget provides an exemption at the time of purchase. It’s a great provision that will free up capital for crucial business investment.”
The bill raises the income tax rate to 9.85 percent for individuals with a taxable income greater than $150,000 or $250,000 for joint filers. This group is the wealthiest 2.1 percent of Minnesotans and they currently pay a smaller percentage in income taxes than low-and middle-income earners. According to data from the Department of Revenue, this would impact 41 filers in Aitkin County and 229 filers in Crow Wing County — less than one one-hundreth of all filers in Aitkin and Crow Wing Counties.
The proposal increases the user-based fees on cigarettes by $1.60 per pack and catches Minnesota up with Iowa, South Dakota and Wisconsin who all have a higher cigarette tax. The bill also closes corporate tax loopholes and subsidies that are outdated, ineffective, or that we can no longer afford.
“Minnesotans and our business community have said loud and clear that they want investments in education, economic development, and property tax relief,” said Rep. Radinovich. “All of that costs money and we’re paying for it responsibly to help build a better Minnesota.”