The Senate Tax Committee considered five similar bills on Thursday aimed at the same goal: reducing the statewide business property tax charged to commercial-industrial and seasonal recreation (cabin) property in Minnesota. Also known as the General Levy, it is the only property tax levied by the state – all others are imposed by local governments and school districts. It was created in 2001 as part of a property tax reform package that also reduced aspects of business and cabin property taxes, but the tax rate and structure hasn’t been significantly revised since its inception.
The 2016 tax bill included a bipartisan plan to reduce this tax, exempting the first $100,000 in market value from taxation. That cost about $115 million in 2018-2019 and was a major financial piece of the tax bill, which was vetoed for other reasons. There is bipartisan support for changes this year as well, but with some of the plans costing upwards of $1 billion, Senate Democrats are especially focused on providing relief to small Minnesota businesses first.
According to the nonpartisan 2015 Minnesota Tax Incidence Study, 53% of the statewide business property tax is paid by non-resident corporations. In other words: for every $1 spent to completely eliminate the statewide business property tax, Minnesota-based businesses would only see 47 cents of that tax relief. Senate Democrats will be working for a more financially sustainable plan that focuses the relief on Minnesota businesses and reserves enough of the surplus to also provide property tax relief to homeowners, farmers, renters and others who need assistance. The bills were laid over for possible inclusion in the Omnibus Tax Bill.