The 2013 Legislature’s first major tax bill, adapting the state tax code to recent federal tax changes, warrants a backhanded Minnesota compliment: Coulda been worse.
This is a bill that taxpayers and tax preparers around the state have been waiting for. It aligns the state income tax code with most of the changes Congress enacted on New Year’s Day, simplifying preparations for most filers and slightly reducing their tax burden.
The bill, sent to Gov. Mark Dayton Monday for an assured signature, is both a bit tardy and a bit cluttered with partisan add-ons. But until last week, legislators were contemplating further additions that would have led to more delay and taxpayer inconvenience. Many of the ultimately discarded additions were provisions of a tax bill that Dayton vetoed in 2012 but that this newspaper supported. We hope to see them back in good time. Now, with tax-filing season in full swing, is not that time.
The Legislature’s DFL majorities finally picked up the pace. But senators could not resist the temptation to hang a few controversial ornaments on the bill.
The biggest outcry rose over a change in the composition of the governing board of the Iron Range Resources and Rehabilitation Board. Change was needed because redistricting had cost that board a quorum and, consequently, its ability to operate. But House and Senate DFLers differed over how best to amend state statutes to make the board functional again.
By attaching their version to a bill that the House could take or leave but could not amend, senators pulled a procedural power play that left House DFLers spluttering but, ultimately, unwilling to further delay an overdue bill. The episode illustrates that one-party control of the Legislature offers no guarantee of lawmaking harmony.
Another Senate amendment is more concerning. It repeals a statutory requirement that the federal tax burden be included in a biennial Revenue Department report, due March 1, that measures how the state and local tax load is distributed among Minnesotans across income levels.
That requirement, enacted by Republican majorities in 2011 as part of the shutdown-ending budget agreement with Dayton, has a partisan tinge of its own. It’s expected to show that while upper-income Minnesotans pay a smaller share of their incomes in state and local taxes than do those with middle incomes, their total tax burden with federal taxes included is higher. That information is seen as undercutting Dayton’s argument for higher state income taxes on top earners.
DFLers counter that while the Legislature can control state and local tax burdens, federal tax policy is beyond its reach. True enough, but legislators ought to be informed by the policy decisions made in Washington. And citizens, who feel all three tax bites, deserve to know how the total pain is distributed.
Ideally, the biennial “tax incidence study” would report state and local tax burdens both with and without the federal tax distribution included. Senate taxes chair Rod Skoe, who offered the amendment removing the requirement, said he expects the authors of the study to do just that, using a footnote. But a Revenue Department spokesman could not confirm that a footnote is in the works.
It should be. The people who pay state taxes must pay attention to federal tax policy. It behooves those who set state tax policy to do the same.
An editorial of the Star Tribune (Minneapolis).