When the Legislature comes back into session next week after the Easter/Passover break, we encourage policymakers to focus their final tax bill negotiations on tax policies that create a fairer tax system.
A proposal that fits that principle well and should be part of final tax legislation is an increase in the Renters’ Credit. The House’s omnibus tax bill (House File 3167) includes a provision to boost the Renters’ Credit by 5 percent for this year only. More than 317,000 Minnesota households would see an average $33 increase in their property tax refunds. The increase in the Renters’ Credit would be automatic – taxpayers wouldn’t need to submit anything in addition to the usual property tax forms or amend applications that have already been filed.
This provision increases the Renters’ Credit by $10.4 million. When they receive their refunds, Minnesota renters are able to catch up on the basics, including medicine, food and school supplies.
The proposed increase in the Renters’ Credit would make our tax system fairer. Low- and moderate-income Minnesotans pay a higher share of their incomes in state and local taxes than those with the highest incomes. The Renters’ Credit limits how much of their incomes these Minnesotans pay in property taxes.
Your organization can demonstrate your support for an increase in the Renters’ Credit by joining a sign-on letter by the close of business on Thursday, April 17.
After the break, a conference committee will convene to work out a compromise between the House and Senate versions of the second tax bill passed this session, House File 3167. Right before the break, the Senate passed its version of House File 3167, which includes $101 million in tax reductions for FY 2014-15 and $107 million in the next biennium. As with its House counterpart, the bill focuses primarily on sales tax and property tax provisions.
The first tax bill passed this session, House File 1777, added $150 million to the state’s budget reserve and made $443 million in tax cuts in this biennium and over $1 billion in the next budget cycle, focused on income tax conformity, the repeal of three business-to-business sales taxes, and estate and gift taxes.
Given the size of the tax cuts in House File 1777, we encourage policymakers to keep the second tax bill limited. The state’s recent April Economic Update provides a caution about the uncertainty inherent in economic projections, and our state’s recent history reminds us that going too far in tax cutting during the good times threatens our ability to sustainably fund our schools, health care and other critical services.
In the remaining days of the session, policymakers should maintain their focus on sustainably funding our state’s priorities, making the tax system fairer, and investing in a future of shared economic success.