Today, House Democrats approved new changes to state taxes to improve fairness and pay for important investments in students, families, and small businesses. The proposal expands the Working Family Tax Credit, establishes conformity on unemployment insurance and PPP loans (up to $350,000 per loan), and provides aid for small businesses that did not receive a PPP loan or did not make a profit in 2020.
“This tax bill is how Minnesota can make sure our neighbors and community members hit hardest by COVID-19 don’t get left behind,” said Rep. Paul Marquart (DFL-Dilworth), chair of the House Taxes Committee. “It’s been an extremely tough year for working families, students, senior citizens, farmers, and small businesses. When the biggest corporations and the wealthiest are doing extremely well, Minnesotans expect the Legislature to level the playing field and fund important investments in people.”
To fund important investments in students, families, and small businesses, the House DFL tax bill creates a new 5th Tier income tax rate of 11.15% on income above $1 million (or $500,000 for single filers) and prevents multinational corporations from sheltering profits in offshore tax havens like Bermuda and the Cayman Islands.
“The House DFL budget invests in Minnesotans' priorities of education, health care, and economic security, while assisting those most impacted by the pandemic,” said House Speaker Melissa Hortman. “Investing in these areas now and into the future requires an ongoing commitment. We’re proposing to make the tax code more fair and progressive to provide sustainable funding for education, health care, and economic security. Minnesotans deserve a budget that will help them recover from the pandemic and thrive once it's over.”
The House DFL tax bill provides direct property tax assistance to more than one million homeowners and renters. Under the proposal, qualified homeowners would receive bigger Homestead Credit refunds and qualified renters would receive bigger Renters Property Tax Refunds.
“Minnesota has the resources to create opportunity for everyone, and today the rich and well-connected are doing better than ever. Meanwhile, too many workers and families are working harder than ever and falling farther behind,” said Majority Leader Ryan Winkler. “Republican politicians have insisted those workers and families should sacrifice more, and wait for wealth to trickle down. Democrats will keep working for a more inclusive economy, in which hard work and sacrifice is rewarded, and the rich and well-connected don't walk away with all of the benefits. That's what this tax bill is all about.”
Local governments benefit from tax exemptions and local option sales taxes that can be used to pay for important infrastructure projects all across the state, such as new libraries and fire stations. Local municipalities are also given the ability to form fire protection districts, allowing them to combine their efforts to help ensure that there’s always a fire rescue squad available for Minnesotans everywhere.
“As the House Property Tax Division Chair, I am proud to have contributed to a fair, balanced, and progressive tax bill,” said Rep. Cheryl Youakim (DFL-Hopkins), chair of the House Property Tax Division. “It invests in our individuals, Minnesota businesses, and our state’s economic stability. In the property tax portion of the bill, we provide flexibility for our municipalities with local options sales taxes and tax increment financing, make investments in property tax refunds and renters credits for Minnesotans, and include other provisions that will help increase affordable housing, encourage energy improvement projects, and allow the creation of fire service districts, as well as tourism districts.”