The Senate passed a bipartisan omnibus tax bill that provides broad property tax relief and carefully targeted income and sales tax credits for small businesses, working families, and veterans. A conference committee has been meeting to compare the bill with the House’s omnibus tax bill which spends over $2 billion, largely in tax cuts for corporations and the wealthiest Minnesotans.
Every type of property will see property tax relief from the Senate bill – including farmers, businesses, homeowners, and cabin owners. After a decade of cuts, the bill returns Local Government Aid to pre-recession levels and adds stability to county budgets. An additional $54 million investment in aids to local governments helps cities, counties, and townships take pressure off local property taxes while continuing to improve local services.
The Senate tax bill also lowers business property taxes and modernizes the way railroad property is valued. A slight change in commercial tax rates takes pressure off homeowners and farmers who have seen drastically increased property values result in higher taxes. The average property tax reduction will be 2.2% for homeowners, 2.1% for agricultural homesteads, and 4.3% for cabin owners. Smaller business owners will see an average 2.8% cut. The property tax decrease for apartments – a factor in maintaining affordable rents – should be 2.4%.
Instead of providing property tax relief to all Minnesota properties, the House republicans phase out the state’s tax on commercial and industrial properties – a move which will cost Minnesota nearly $1 billion a year by 2021. The biggest beneficiaries of these permanent corporate tax cuts are owners of large businesses, and many of the largest businesses are headquartered out-of-state. The republican tax bill also includes changes to the estate tax which could benefit just 800 of the wealthiest Minnesota families.
The Senate’s tax bill also includes a one-time appropriation to pay back a shift used to balance a past budget deficit. Undoing this shift is a responsible provision that will provide tools for future legislatures facing a deficit. The republican tax bill proposes nearly $400 million in new shifts that take money from the state’s general fund in order to fund much-needed road and bridge repairs. Using general fund dollars moves money away from our education and health and human services programs while adding risk to the state budget.
The Minnesota Senate has spent the 2015 Legislative Session working on budget bills to invest in services for children, seniors, and working families across the state while continuing to develop a fairer tax system. With this bill, the Senate has provided more than $1 billion of tax relief over two years – without destroying the responsible state budget DFLers have worked so hard to build.