House DFLers on Monday proposed giving most homeowners bigger property tax refunds and paying for it by reducing refunds for some of the wealthiest Minnesotans.
The plan, a cornerstone of the DFL's tax bill, would cut overall property taxes by 1.1 percent this year and an expected 5.7 percent in 2009. The idea is being promoted by Rep. Paul Marquart, DFL-Dilworth.
The biggest breaks would go to people who pay high property taxes relative to their incomes. It could add hundreds of dollars to the refund of a lower-income filer, while potentially subtracting hundreds from the refund of someone earning more than $200,000.
DFLers hope the proposal avoids the fate of a plan last year that created a higher income tax bracket. Gov. Tim Pawlenty vetoed it.
Reacting to the new plan, Pawlenty spokesman Brian McClung said, "Governor Pawlenty believes a more direct and effective approach to property tax relief would be to cap property taxes. Doing so would provide benefits to every homeowner."
But Growth and Justice, a public policy research group that advocates for more progressive tax policies, hailed the proposal as a fair way to redistribute the property tax burden. The group's president, Dane Smith, noted that those with the highest incomes now pay a smaller percentage overall in state and local taxes than less affluent people, "and this unfairness has been getting worse over the [last] couple of decades."
The property tax plan would provide an estimated $207 million in relief to homeowners who make up to $200,000 and whose property taxes amount to more than 2 percent of their incomes.
Proponents said the relief package would benefit senior citizens on fixed incomes and farmers, and would increase state aid to cities, counties and townships by $53 million.
The plan to restructure the property tax burden comes as cities complain they are paying for an increasing share of local government costs as state aid has declined. City property taxes rose more than 15 percent from 2002 to 2006, while state aid dropped nearly 25 percent, according to Department of Revenue figures cited by the Coalition of Greater Minnesota Cities.
Pat Doyle • 651-222-1210