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HOUSE UNVEILS SIGNIFICANT PROPERTY TAX RELIEF BILL

 

St. Paul, MN- Members of the House DFL Property Tax Relief Committee unveiled their plan on Monday to provide significant and permanent tax relief to Minnesota homeowners, as well as increase the fairness of our state's tax system.

State Representative Aaron Peterson said the bill is an important step forward in returning balance to the state property tax system, which has spun out of control in recent years.

"Since 2003, our state government has asked property owners to pick up the tab for services that have historically been covered by the state, such as education and local improvements and services," said Peterson. "As the result, property taxes have increased by $1.7 billion, and are projected to go up by another $600 million next year.

These increases are forcing people out of their homes and hurting young families and small businesses."

The reform bill provides $543 million in property tax relief through a series of initiatives, including a $133 million buyback and indexing of School Levy Aid. The centerpiece is a new Homestead Credit State Refund that provides reform by building more fairness into the tax system. Specifically, if a person's property tax bill is more than 2% of their income, they will get a certain percentage of the amount over 2% refunded to them, based on income. This provision will provide $223 million in direct relief to Minnesota homeowners.

"Property taxes are a stable source of revenue that cities can depend on, but they were never meant to be the main funding source," said Peterson. "This bill will offer significant relief to every property owner in the state and it's about time."

The bill creates a 4th tier of income tax, with every dollar of new money going directly into property tax relief. This plan will affect couples who earn $400 thousand or more, after deductions, and single earners who make $226 thousand, again after deductions. Approximately 81% of the 4th tier will be made up of Minnesotans who earn $1 million a year or more.

According to the Minnesota Department of Revenue's tax incidence report, the highest earners in our state are actually paying a smaller percentage of their income in taxes than the middle class. Specifically, by 2009 the richest 1 percent of Minnesotans, those making more than $1 million a year, will pay 8.9 percent of their income in state and local taxes. By contrast, those who make between $34 thousand and $52 thousand will pay 12.5 percent in total state and local taxes. This bill will bring more fairness to Minnesota's income taxes, according to Peterson.

"The question really becomes, how do we pay for the services Minnesotans value the most?" said Peterson. "We need a progressive tax system that does not place an undue burden on young families just starting out, seniors on fixed incomes or small businesses.

I believe when Minnesotans consider the options, they will agree this plan creates more tax fairness, while at the same time offers a benefit to every property owner in the state."

 

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