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Minnesota House Sends Tax Cut Bill to Governor Dayton, Includes Legislation Authored by Rep. Halverson to Repeal Warehouse Tax

Friday, March 21, 2014

St. Paul, Minnesota — Today, the Minnesota House of Representatives passed legislation that cuts taxes for middle-class Minnesotans and repeals three businesses-to-business taxes, including the warehouse tax. State Representative Laurie Halverson (DFL – Eagan) was the chief author of legislation to repeal the warehouse tax and her bill was included in the final bill. House passage sends the bill to Governor Dayton to be signed into law.

“Repealing the warehouse tax received broad bipartisan support and I’m pleased that through the efforts of our local business community, constituents, and legislators on both sides of the aisle, we’re repealing it before it went into effect,” said Rep. Halverson. “An Eagan business owner testified in committee about the jobs being lost due to the warehouse tax, and that’s why I focused on this issue. I’m very pleased we’re sending its repeal to Governor Dayton today.”

The bill also repeals the commercial equipment repair (including farm machinery) and telecommunications equipment taxes. The Legislature is able to repeal these taxes in a fiscally responsible manner because the state has a $1.2 billion budget surplus.

Whenever Congress changes federal tax law, the Legislature must decide whether to conform to the changes at the state level or not. The state did conform to federal changes for the 2012 tax year. Last session, Rep. Halverson co-authored a bill for federal tax conformity for tax year 2013 and beyond. However, this did not end up in the final budget signed into law.

More than one million middle-class Minnesotans will see $225 million in tax cuts due to federal conformity and boosting the state’s Working Family Credit. The tax cuts through federal conformity include:

  • $111 million for middle income married families by eliminating the “marriage penalty”
    • 650,000 families will see an average tax decrease of $115
    • The vast majority of families claiming the standard deduction make less than $75,000
  • $36 million for low income working families by matching the state’s Working Family Credit with the federal Earned Income Tax Credit (EITC)
    • 54,000 working families will see an average tax decrease of $300
  • $7.2 million for homeowners that refinanced or had a short sale
  • $3.9 million for new homeowners through deduction of mortgage insurance premiums
    • 80,000 new homeowners will see an average tax cut of $60
  • $26.4 million for students and parents paying for college and students paying off loans
  • $1.9 million for Minnesota families with dependents
    • 26,000 families with household incomes below $38,570 will see a $80 tax decrease
  • $400,000 for adopting parents who receive adoption assistance from employers
  • $1.1 million for 60,0000 teachers with the classroom expense deduction for educators
  • $4 million for charitable contributions
  • $6.7 million for businesses - to make tax filing simpler for businesses

(Source: Non-partisan House Research)

The bill increases the Working Family Credit above and beyond federal conformity, providing a total of $66.2 million in tax cuts to 331,000 claimants earning less than $49,103. The average family will see a $146 tax cut through this expansion of the Working Family Credit.

“More than a million Minnesotans file their taxes between April 1 and April 15, making quick passage of this bill of the utmost importance,” said Rep. Halverson. “Hard-working, middle-class Minnesotans are going to see tax cuts as a result of this bill. We’re continuing to build on Minnesota’s momentum and expand economic opportunity.”

If taxpayers have not filed their tax return, the Department of Revenue is asking that taxpayers wait until Monday to file. If they have already filed, the Department of Revenue will examine the return to see if they qualify for these tax cuts and notify them if they need more information or if they need to file an amended return.

Rep. Halverson encourages constituents to contact her with any comments, questions, concerns, or ideas on any legislative topic. Rep. Halverson can be reached by phone at 651-296-4128 or by email at rep.laurie.halverson@house.mn.