Tax act provides relief

To the Editor:

The new tax act passed by the Minnesota Legislature in 2013 will provide about $272 million of annual direct and indirect property tax relief to owners of Minnesota homes, farms, businesses and cabins. It is this record of accomplishment that Rep. Greg Davids, R-Preston, is trying to disparage through a series of inaccurate and misleading statements, such as those that appeared in a recent letter to the editor in this newspaper.

Rep. Davids’ claim that “everyone pays more – from the wealthiest to the poorest of the poor” as a result of the 2013 tax act is false. A non-partisan Revenue Department report shows that total state and local taxes will decline for non-smoking households with annual income below $101,000.

True – taxes will increase for smokers. But the cost of smoking in terms of increased medical expenditures, lost workplace productivity and premature death is more than $20 per pack. In light of this, a cigarette tax increase to $2.83 per pack is justified to help defray the costs of this destructive addiction and to incentivize smokers to quit and non-smokers not to start.

Also true – the wealthiest 2 percent of Minnesotans will pay higher income taxes. However, even after this increase, the total state and local tax rate paid by these households will still be less than what is paid by lower and middle-income Minnesotans.

The property tax analysis that Minnesota 2020 presented to the Sentinel is based on non-partisan House research projections. Davids contends that the residential property tax reductions shown in this analysis are largely the result of declining values. However, a separate House Research analysis in which values are held constant show southeast Minnesota property taxes going down by 4.7 percent for homeowners, 2.3 percent for farmers and 3.2 percent for businesses. All of this property tax relief is the result of the 2013 tax act.

Furthermore, these property tax reductions do not factor in the property tax relief resulting from the $128 million expansion of state-paid property tax refunds that are directed primarily to middle-income families. After last year’s $376 million property tax increase resulting from the elimination of the Homestead Credit and other provisions of the 2011 tax act (which Davids supported and authored), the 2013 tax act is providing property tax relief for southeast Minnesota and taxpayers throughout the state.

John Van Hecke,

executive director

Minnesota 2020