Just more than a week ago, Virginia and Texas Tech battled for the NCAA basketball championship at U.S. Bank Stadium. They didn’t reach the big game by following the status quo. They went all out and achieved the highest level of excellence possible.
Across the river that morning, House Democrats gathered at the State Capitol to announce a new tax bill that adopts the same commitment to excellence for Minnesota as we saw on the basketball court. After corporations hit the jackpot with federal tax reform, Democrats want to go “all out” to make Minnesota’s tax system fairer, build a great future and level the playing field for working families, farmers, senior citizens and small businesses.
How does House Democrats’ tax bill go “all out” for Minnesota? First, it builds a great future for all Minnesotans, no matter where you live or what you look like.
According to budget experts, extending current expenditures into the future puts us into a deficit, which would force schools to lay off teachers, jeopardize the ability of public safety officials to keep us safe and threaten the solvency of our nation-leading health care programs that millions of our neighbors depend on. A better alternative is raising new revenue in a way that is fair and honest, and investing it into priorities like education that create a great quality of life for every Minnesotan and grow our economy into the future.
Minnesotans have been telling the Legislature for years that the state’s commitment to our schools isn’t keeping pace with inflation. As a result, some communities have the financial ability to build great schools through bond referendums and bigger operating levies, while others with smaller property tax bases do not. Every child in Minnesota deserves a world-class education, and we cannot allow a student’s ZIP code to determine their future. That’s why House Democrats are investing three-fourths of our budget’s new revenue into E-12 education and the remaining fourth into higher education to freeze tuition at our public colleges and universities.
How does House Democrats’ tax bill raise new revenue for these investments? We do it by making our tax system fairer and leveling the playing field for our working families, senior citizens, farmers and small businesses. For example, Democrats propose bringing back tax dollars to Minnesota that big multinational corporations have shifted to tax havens like Bermuda and the Cayman Islands. When large corporations use loopholes to avoid their tax obligations, we all pay more in taxes, and crucial services like education, health care and public safety go underfunded.
Our plan also expands the Working Family Credit for approximately 380,000 families. It cuts taxes on Social Security benefits for 200,000 seniors, and as a result, 56% of all seniors would not pay one penny of taxes on their Social Security benefits. Our veterans with disabilities would receive tax cuts through expansion of the Military Service Credit. Farmers would receive bigger property tax cuts and along with small businesses would get to completely deduct up to $1 million of new or used equipment as a result of conforming to Section 179 full expensing. Providing new aid for local and county governments — plus $100 million in property tax cuts for homeowners, renters and farmers — would help to address skyrocketing property taxes in communities throughout our state.
Finally, House Democrats’ tax bill provides real tax reform through federal tax conformity. It matches the income tax standard deduction with the federal level of $24,400, which would cut taxes for two-thirds of Minnesotans and greatly simplify the tax filing process. According to estimates, 93 % of Minnesotans would take the standard deduction as a result of the change, resulting in a 7 % tax cut on the median household income.
If House Democrats’ tax bill is signed into law, Minnesota will prosper. Our kids will be able to climb the ladder, reach their goals and cut down the nets to celebrate reaching the highest level of excellence possible in life, just like Virginia had the opportunity to do last week. After big corporations hit the jackpot with federal tax reform, it’s the right thing to do.
Paul Marquart, DFL-Dilworth, is chair of the Minnesota House Tax Committee.