Hello from St. Paul,
Hope you’re having a good week so far. At the Capitol we’ve been working on a number of topics, including a fix for a tax problem that has cost some farmers and business owners more than $100,000.
TAX CODE DIFFERENCES CAUSING FINANCIAL DISASTERS
Last session, Governor Walz signed into law a plan that directed the Department of Revenue to review federal tax code Section 179 – accelerated depreciation - claims, adjust for new expensing limits, and review any gains or losses from the equipment they traded in.
This meant a farmer or business owner who traded in farm equipment or other machinery in 2018, and realized a financial gain on that equipment, was subject to paying income taxes on that gain immediately. Whereas on the federal level, that tax increase was negated by higher upfront expensing limits. The tax bill signed by Governor Walz only allowed the higher expensing limits over a six-year period, resulting in a tax increase in Year 1 for farmers with only a promise it would be negated over six years.
The issue is impacting your neighbors as well. This week, Kevin Poppel of Albert Lea and Jason Hollund of Wells testified before the Minnesota House Taxes Committee about the problems being caused by Section 179 nonconformity. In Hollund’s case, he received a $700,000 bill. To view their testimony, click here.
I am co-authoring legislation that would fully fund conformity to Section 179 in order to help those who have traded equipment and had that trade value counted as income. The legislation would also cancel any penalties and interest issued by the Department of Revenue on any unpaid debts that had been created due to this ordeal. Another bill is also moving forward that only does partial conformity, which is a good start, but does not finish the job.
With our $1.5 billion surplus, we definitely have the funds available to fix this problem, and its my hope we’ll do so very quickly.
GOOD NEWS FOR FARMERS
A popular state loan program could soon be available to farmers thanks to recent action taken by the Minnesota House of Representatives.
The House approved a proposal dedicating $50 million to the Rural Finance Authority (RFA) loan program, which ran out of funding on February 21. The RFA is Minnesota’s main agricultural lending arm. It partners with agricultural lenders to provide low-cost financing to farmers on terms and conditions not otherwise available from other credit sources.
The bill now heads to the Minnesota Senate for its approval.
CAPITOL VISITORS
It was my pleasure to attend and speak at the Minnesota Alliance of YMCA’s annual YMCA Day at the Capitol. I was humbled and honored to be the recipient of the YMCA Champion of the Year award there for my work in authoring and advocating for the Sibling Bill of Rights that was passed into law in 2018. It was good to see Director of the Albert Lea YMCA Dennis Dieser there this morning, as well as Sasha, a former foster care youth who was directly involved in getting this bill passed.
I was also pleased to have the Gassmann family from Geneva visit me as part of “Homeschool Day on the Hill.”
Have a good weekend,
Peggy