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Pitting renters against businesses

Published (2/17/2012)
By Lee Ann Schutz
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Renters may be called upon to pay for the phase out of the state commercial-industrial property tax, according to opponents of a bill that would make several changes to the state’s tax code.

Minnesota is only one of 10 states that provides an unqualified renters credit, according to House Taxes Committee Chairman Rep. Greg Davids (R-Preston). The credit should be reduced, he said, to more adequately reflect the actual amount reflective of property taxes paid by the property owner.

He brought his proposal (HF1914) before the committee Feb. 14 for discussion purposes only. The bill’s companion, SF1596, sponsored by Sen. Julianne Ortman (R-Chanhassen), awaits action by the Senate Taxes Committee.

The bill would reduce the renters’ refund from 17 percent to 15 percent starting with tax year 2011. Additionally, it would create a separate refund table for senior and/or disabled renters and modify the maximum income eligibility requirements.

Last year’s tax law lowered the renters credit refund percentage from 19 percent.

The proposed change would help fund the phase out of the state’s General Levy (the commercial-industrial property tax), Davids said. This would “lower the cost of doing business in the state, so that it becomes more competitive.”

However, testifiers, including Steve Peterson representing the Coalition of Greater Minnesota Cities, are concerned that, while in this biennium, the move would be paid by changes to the renters refund, the bill does not specify how the “hole” to the state’s revenue would be filled in later years.

Several DFL members said renters should not bear the burden of reducing property taxes for businesses.

“It’s a sad commentary on what’s happening in this state,” said Rep. Michael Paymar (DFL-St. Paul). “When we take it from the poor; when we take it from the disabled, there’s something about our priorities here that are really getting screwed up.”

The bill would also conform the state to the federal increase in the standard deduction for married filers in tax year 2012 and retain it at the state level regardless of federal changes in the future.

It would also increase the homeowner property tax refund maximums and freeze city local government aid payments at 100 percent of pay 2012 amounts.

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