'Fine-Tuning' Of Taxes Is In The Wind At Legislature
ST. PAUL, Minn. (AP) — In Rep. Greg Davids' perfect world, legislation he steers into law this year would jettison a new fourth bracket on Minnesota's income tax and phase out a statewide property tax on commercial property that has long vexed business leaders.
But the soon-to-be House Tax Committee chairman knows neither stands much chance, and he'd rather concentrate on things that do. Newly ascendant House Republicans are sure to make some motions for tax cuts, but the question is where and how much they can get agreement on with Democratic Gov. Mark Dayton and the DFL-controlled Senate.
"The first rule will be, 'Do no harm,'" said Davids, R-Preston. "Friends of mine on the right will want to go further in the tax-cut area and friends of mine on the left are going to want to go further in the spending area. We're going to have to manage expectations."
That talk of restraint is in tune with Senate Taxes Committee Chairman Rod Skoe and Myron Frans, the Revenue Department commissioner who is shifting to the Department of Minnesota Management and Budget for Dayton's second term.
"The tax arena is going to be fairly quiet," Skoe, DFL-Clearbrook, said.
"It's not the kind of budget year that you would want to make very significant changes," Frans said. "We are looking to make some fine-tuning changes."
For his part, Dayton intends to push for an expansion of a child-care tax credit by lifting a cap that disqualifies families above a certain income.
House Republicans have said they'll push to exempt farmland from certain school construction levies, which would ease property tax bills for landowners facing bigger-than-average spikes. Democrats warn that it could shift costs to other taxpayers if nothing is done to cover the lost school revenue.
There seems to be universal agreement on a fast-track tax bill that would line Minnesota's tax deductions and credits up more closely with those offered in the federal code. The so-called tax conformity plan could be on Dayton's desk within two weeks of the session's Tuesday start.
Frans said it's essential that a proposal pass by Jan. 20 to avoid extra complications or possible amended filings by qualifying taxpayers on 2014 returns. Davids said he'll begin advancing the second week of session.
"This is one where you don't care who gets the credit," Davids said. "Everybody wins."
The changes involved would, among other things, extend to: teachers who deduct the cost of classroom supplies they purchase; college students for certain tuition and fees they pay; home sellers who take a loss on the transaction; and retirees who withdraw money from IRAs to make charitable contributions. A host of business breaks are also in the mix, including some for racehorse owners, film production and energy efficiency upgrades to commercial buildings.
Because of accounting quirks, the state treasury would save money in the current fiscal year but would see a minor cost down the road.
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