To supporters, the House omnibus tax bill looks like the biggest tax cut the state has offered residents in decades. For its detractors, it does not reduce taxes enough.
Still, after four and a half hours of debate on Wednesday, the bill passed by a vote of 69 to 62 and is on its way to the Senate.
Sponsored by Rep. Paul Marquart (DFL-Dilworth), HF3669, as amended, would result in $1.65 billion in tax reductions and credits in the 2022-23 biennium and $1.6 billion over the next biennium, according to the Department of Revenue.
Marquart highlighted how the bill’s provisions would reduce the tax burden for families with young children and the elderly, whether they own or rent.
“This is a strong bipartisan bill that will deliver the biggest property tax cut in more than 20 years for homeowners and renters,” Marquart said. “And it will have a significant impact on our families and our elders, and help those who have been most affected by the pandemic.
“The premise is very Minnesotan. … If you see your neighbor has a challenge, you go and ask how you can do the most good. This bill examines: how can we help? »
Marquart said the help will come in the form of a $3,000 child care tax credit for each child under age 5, an increased student loan tax credit and a reimbursement of $325 for each child 16 and under.
The Senate tax bill, SF3692, sponsored by Sen. Carla Nelson (R-Rochester), contains only two main provisions, as opposed to the House bill’s dozens. Passed by the Senate on April 7, SF3692 would exempt all Social Security benefits from tax and reduce the first level income tax rate from 5.35% to 2.80%.
The House bill leaves current income tax levels as they are, but changes taxes on Social Security benefits.
“For seniors, we say Social Security benefits, as a married filing spouse, if your income is $75,000 or less, you won’t pay a penny in Social Security taxes,” Marquart said. “If you are single, that income level would be $59,000 or less. This provision would affect approximately a quarter of a million seniors at an average reduction of $470.
“But we also help older people maintain their independence and ensure they have quality health care in the future. We are doing this with significant property tax cuts.
The most significant of these reductions would come from an expansion of the tenant credit, which would become a refundable credit payable on the same schedule as other tax refunds. Its $372.6 million impact on the state’s general fund in fiscal year 2023 would be the biggest on the bill.
While praise for Marquart – who will retire at the end of this term – was widespread on both sides of the aisle during the indoor debate, some Republicans said the bill does not go far enough in its cuts. social security contributions and are concerned corporate and personal income taxes in the state remain too high.
DFL members countered by welcoming the ‘Great Start’ childcare tax credit and rebate for each child 16 and under, as well as a change in the formula for helping local governments and assistance to county programs. Members of both parties hailed the bill’s dedicated funding to the state’s soil and water conservation districts.
Two amendments were proposed.
The body approved a Marquart amendment that would remove the expiration date for a tax exemption for energy storage systems and clarify some functions of the tax expenditure review board that was launched this year. The defeat was one offered by Rep. Cal Bahr (R-East Bethel) who allegedly transferred $484,650 of Minneapolis local government aid to the county aid program for Anoka County.
This last question centers on the total still clearly owed to Anoka County for its law enforcement and other services rendered in the wake of the death of George Floyd at the hands of a Minneapolis police officer. The proposed amendment sparked a 90-minute debate centered primarily on mutual aid between city and county agencies.
Other reductions, credits and new assistance programs proposed in the bill include:
- an unemployment insurance subtraction with a maximum of $10,200;
- a sales tax exemption on building materials for local governments and non-profit organizations;
- grants to counties for business assistance in the event of a pandemic;
- grants to counties for community vocational labor academies;
- an extension of the tax credit for the rehabilitation of historic monuments;
- grants to counties for pandemic rental assistance; and
- a rebate to municipal utilities that have increased their rates due to the 2021 polar vortex.
[MORE: A list of the bills included in the House omnibus tax bill]
“I thought we were going to boldly go where no man or woman had gone before,” Rep. Jerry Hertaus (R-Greenfield) said. “But I think the Klingons got in the way. … This bill is unbalanced because less than 10% of this bill is about businesses, which employ people and provide opportunities. … The Expanded Renter’s Credit is not tax relief, it’s developing another program. It’s a subsidy that encourages renting rather than owning.
“This bill will make a huge difference,” Marquart replied. “This bill says to our families and our seniors, we have your back. But we’re going to need another $200,000 if this bill becomes law for all those billboards that are going to go up in North Dakota, South Dakota, Iowa, and Wisconsin saying, ‘Working families and Seniors: For Lower Taxes and Great Services, Come to Minnesota!’”