Dear Neighbors,
Activity is picking up at the Legislature. I wanted to give you a short update about a bill I’m co-authoring and two important pieces of legislation that passed off the House floor on Monday.
Veteran Hiring Tax Credit Bill
A bipartisan group of legislators recently announced legislation that would offer tax credits to businesses that hire unemployed Minnesota veterans. I have signed on as a co-author on the bill. Minnesota has the third highest unemployment rate in the nation for veterans who have served since 2001.
The bill has strong support from a number of veterans and veterans’ advocacy groups, including the Military Action Group, the United Veterans Legislative Council, the Minnesota Assistance Council for Veterans, and the Association of the United States Army. The bill is chief authored in the House by Rep. Anna Wills (R – Apple Valley) and in the Senate by Sen. Chuck Wiger (DFL – Maplewood).
The high unemployment rate for our veterans is unacceptable and we can and we should do more to solve this problem. Our veterans have served our country honorably and deserve our full support. Legislators may disagree on a number of issues, but this shouldn’t be a partisan issue. We can work together and get this done.
Tax Conformity
The House unanimously passed HF 6, known as Federal Tax Conformity, which adds clarity and simplicity to Minnesota’s tax system by conforming to federal tax changes made in 2012. These changes will result in tax relief for middle class Minnesotans, including 55,000 teachers, 90,000 homeowners, 60,000 students and 32,000 small business owners.
Why does Minnesota need federal tax conformity?
Congress’ late enactment of the American Taxpayer Relief Act of 2012 has created potential problems for Minnesota taxpayers who qualify for the tax year 2012 federal changes and want to file their Minnesota taxes. The problem is that the new federal tax changes allow deductions that are not currently allowed under Minnesota’s tax system.
Without this legislation each taxpayer who claims any of the affected deductions will need to file a special form to calculate their Minnesota income tax liability. These taxpayers would need to “add back” the federal deductions and include that amount in their Minnesota income tax liability. All of this adds up to a lot of unnecessary confusion and problems.
If Minnesota does conform to the new changes, then Minnesotans would likely not need to change forms and taxpayers could file without making additional adjustments.
How many Minnesotans will be affected by federal tax conformity?
Over 250,000 tax returns will be affected. Affected taxpayers include:
- 55,000 teachers who claim the $250 educator expense deduction
- 90,000 homeowners who claim an itemized deduction for mortgage insurance premiums
- 60,000 students or parents of students who take up to $4,000 for the higher education tuition and fee deduction
- 32,000 small business owners who quality for Section 179 expensing
- Unknown amount of seniors who would need to recalculate the amount of Social Security benefits that would be taxable in Minnesota, which would exceed the amount taxed federally because they would not qualify for the IRA distributions to public charities if age 70 ½ or older.
Conforming to federal tax year 2012 provisions provides simplicity and clarity for taxpayers. I am optimistic that we can get this common sense legislation signed into law by Governor Dayton as soon as possible.
Expansion of Medical Assistance
On Monday, the House also passed HF 9, an expansion of Medical Assistance, which would reduce the number of Minnesotans without health insurance. Medical Assistance is Minnesota’s Medicaid program. This bill would expand Medical Assistance to Minnesotans with income up to 133 percent of the federal poverty guidelines. As a result, over 40,000 currently uninsured Minnesotans will be covered by insurance by 2016.
The federal government will be paying most of the cost, so while we will be insuring 40,000 more people, we’ll be saving $129 million in this biennium and another $237 million in the next biennium.
Because more Minnesotans will be covered with insurance, this will also reduce costly uncompensated care for the uninsured in Emergency Rooms. This will reduce the hidden tax that is passed onto Minnesotans who do have health insurance to pay for uncompensated care.
The Senate version of this bill continues to move through the process and I’m hopeful that we can get this to Governor Dayton for his signature soon.
Throughout the legislative session, feel free to contact me with any questions, comments, or concerns on any legislative issue. I can be reached by phone at (651) 296-6206 or by email at rep.mary.sawatzky@house.mn. You can also follow me on Twitter for updates. Thank you for the honor of serving you in the Minnesota House of Representatives.
All the best,
Mary Sawatzky
State Representative
District 17B