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Bill would raise income taxes for Minnesota schools
The aim is to ease property tax burdens by increasing taxes for Minnesotans who pay the highest income tax rate.
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A prominent Minnesota DFL representative has proposed an income tax increase aimed at raising hundreds of millions more dollars annually for schools.
The bill, introduced Monday by Rep. Mindy Greiling, DFL-Roseville, would raise the tax rate from 7.85 percent to 8.5 percent for Minnesotans who pay the highest income tax rate.
Greiling, who is chairwoman of the House K-12 finance division, estimated that the added revenue would amount to $252 million next year. Greiling said the measure would affect about 170,000 out of 2.5 million total state income tax returns. A number of those returns are filed by married couples filing jointly.
She said the idea is not only to get an extra pot of money for education, but also to quit forcing school districts to go to voters for higher property taxes to make up for funding shortfalls.
"Schools should be our top priority, and our parents are willing to pay for them," said Greiling said. "We never meant for tax levy referendums to pay for education, but that's what's been happening, and we've reached a saturation point."
The additional income tax revenue would be designated for a special K-12 funding account that could be used to pay for various education expenses. Those might include helping districts control their soaring special education expenses, and paying for "school innovation and reform" measures. Greiling's proposal, which is sure to meet opposition from House and Senate Republicans, would boost income taxes for those taxpayers who are married, filing jointly and make more that $123,750 in taxable income a year, and unmarried taxpayers making more than $69,990 in taxable income a year. Total incomes for taxpayers are generally higher than taxable incomes, which take tax deductions into account.
Most school district property tax increase proposals were defeated by voters in November.
Tax impact
A married couple filing jointly and making $175,000 a year in total income would see their tax bill go up from $9,449 under the proposal to $9,553, according to projections calculated by House researchers. For a single, unmarried taxpayer making a total income of $100,000 a year, it would raise state income taxes from $5,672, to $5,763.
"Ouch," said Phil Krinkie, president of the Taxpayers League of Minnesota, and a former legislator known for his opposition to raising taxes. "Now that school districts have passed hundreds of millions of dollars in property tax increases for schools, (the DFLers) want to come back and dip into taxpayers' wallets one more time for education."
The legislation comes without the stamp of approval from the DFL House leadership.
Greiling said she had told DFL leaders of her plan to introduce the income tax legislation, but didn't ask for their permission.
House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said she would not stand in the way of any legislator who wanted to introduce a bill, but would not say whether she supports the measure. Brian McClung, spokesman for Gov. Tim Pawlenty, said that the governor opposes the proposal.
"The governor doesn't think we need to raise taxes when we have a [state budget] surplus, and spending will increase by 9.3 percent under his budget without a tax increase," McClung said.
But one of the freshman legislators supporting Greiling's measure said the message he got from voters in November was that they are willing to pay higher taxes to improve schools.
"I was told by several people, one being a school board member, that he would be willing to pay more taxes that would go to education," said Rep. David Bly, DFL-Northfield. "In the community of Northfield, I heard this frequently [going door-to-door campaigning]; the need for education is so great that they would be willing to do that."
The higher tax rate proposed by Greiling is not new. Before 1999, the highest state tax rate was 8.5 percent. It was reduced that year to 8 percent, then to its current 7.85 percent in 2000.
Norman Draper • 612-673-4547 • ndraper@startribune.com
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