Lawmakers should make tax fix their No. 1 priority
The state of Minnesota and the incoming Walz administration are heading into the new legislative session with some good fiscal news. The budget forecast indicates the state will have a surplus of $1.5 billion over the next biennium. That should help ease the strain of writing a new two-year budget.
The question of what to do with all that will loom large in the upcoming session. Gov.-elect Tim Walz wants to use some of it to finance new initiatives for education, health care and local communities. Republican legislative leaders want tax relief.
And that brings up an issue that the Legislature should address ASAP in the session — a bill to bring the state up to date with the new federal tax law.
The Kiplinger Report recently put Minnesota at the top of its list of “the ten least tax-friendly states.” Here’s what they had to say: “The North Star State’s top tax rate of 9.85 percent is one of the highest in the U.S. But what makes Minnesota really stand out — and not in a good way — is its income tax rate of 5.35 percent even for the state’s lowest earners. And thanks to the federal tax overhaul, it could get worse. Minnesota uses federal taxable income as the starting point for calculating state taxes. An estimated 300,000 Minnesotans will pay higher state taxes due to the loss of personal and dependent exemptions on their federal tax returns. Minnesota lawmakers and Gov. Mark Dayton were unable to agree on a fix during the 2018 legislative session, which ended in May. For that reason, Minnesota moves to the top of our least-friendly list.”
If the Legislature wants to help Minnesota taxpayers keep more of their hard-earned money, they need to act fast on a tax fix. We urge lawmakers and Walz to make that fix a priority when the session starts in January, then worry about what they will do with the anticipated surplus.