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Minnesota Legislature

Care credits for working families

Published (2/20/2009)
By Kris Berggren
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Legislators debated the costs and benefits of a proposed change to the dependent care tax credit that would cost $15 million, but could lighten the tax burden for thousands of working parents of young children.

Sponsored by Rep. Nora Slawik (DFL-Maplewood), HF276 would align the state dependent care credit eligibility with its federal counterpart and simplify the process for taxpayers.

“Over time state and federal credits have become out of synch and difficult to navigate, and end up leaving low-income families out who need it the most,” Slawik told the House Early Childhood Finance and Policy Division Feb. 12. The division approved the bill and sent it to the House Finance Committee.

About 46,000 families would receive a larger state credit than under current law, including about 11,000 who fall through the cracks under the current formula and receive no state credit. About 4,000 families would receive smaller state credits than under current law.

The $15 million price tag troubled Rep. Keith Downey (R-Edina).

“In our taxes committee, as we are debating many of the other tax credits within the governor’s overall budget proposal, one of the disciplines that we are asked to adhere to is that if we’re extending an additional credit we are asked to provide some means,” he said. “I personally don’t like this terminology — to consider how we are ‘paying’ for the credit.”

Putting even a little more money into low-income families’ pockets could have lasting benefits, said Rep. Gail Kulick Jackson (DFL-Milaca), such as decreased rates of alcohol and chemical abuse and domestic abuse, and increased children’s school success.

“It’s too bad we don’t have a figure for the benefit of helping people stay employed, keeping their jobs,” she said.

Downey lamented the lack of opportunity to weigh the value of a credit “because we do static budgeting as compared to dynamic,” he said. “We simply have to balance a tax credit either with a revenue increase, a tax increase somewhere else or the reduction of another credit.”

A companion bill, SF653, sponsored by Sen. Linda Scheid (DFL-Brooklyn Park), awaits action by the Senate Taxes Committee.

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