Dayton pushes tax help for low-income families, farmers

ST. PAUL, Minn. - Gov. Mark Dayton wants to see tax relief for low-income families, parents with child care costs and farmers.

The governor unveiled his proposal Thursday for a $300 million tax bill in 2017 just days after the Legislative session began. But Dayton's vision for how to dedicate part of a $1.4 billion budget surplus to tax relief will hinge on Republicans who control both chambers of the Legislature.

“Our tax bill provides relief to more than 450,000 Minnesotans. It provides assistance to those who need it most, while protecting the progress we have made to stabilize our state’s finances,” said Governor Dayton. “I look forward to working with the Legislature to find a commonsense solution that prioritizes the needs of Minnesota families.”

Dayton is aiming to expand a child-care tax credit to 95,000 more families and increase the yearly credits for low-income earners. It would be the first tax bill in years if it's passed. Dayton vetoed a similar package in 2016 due to a costly wording error.

Here are some other features of the Dayton/Smith tax proposal.

  • Federal Tax Conformity – By aligning Minnesota’s tax code to tax relief enacted by President Obama and Congress in 2015 and 2016, the Governor and Lt. Governor’s tax proposal would provide $21 million in targeted tax cuts for middle class families. Governor Dayton and Lt. Governor Smith’s proposal would benefit college students and their families paying for higher education, teachers buying classroom supplies, homeowners who refinance their mortgages, and new homeowners paying mortgage insurance.
  • Working Family Tax Credit – The Working Family Tax Credit makes work pay by supplementing the wages of low-income workers. The Governor and Lt. Governor’s proposal would broaden the reach of the Working Family Credit, investing $93.9 million to make 107,000 new households eligible. Over 260,000 families currently receiving the credit would see an increase. The average family would save an additional $124 per year.
  • Making Child Care More Affordable – Child care costs Minnesota families over $10,000 per year for each child, on average – some of the highest costs in the country. But under current law, only 33,000 Minnesota families are eligible to receive tax credits for child care. Governor Dayton and Lt. Governor Smith’s proposal would expand eligibility for these tax credits to a total of 95,000 Minnesota families, providing $61 million in tax cuts. Another 75,000 families, who were already eligible, would save an additional $379 per year.
  • Cutting Property Taxes for Minnesota Farmers – Farm property taxes in Minnesota have increased 114 percent in the last decade. This problem has been compounded by low commodity prices and rising agricultural land values. To help relieve property tax burdens on Minnesota farmers, Governor Dayton and Lt. Governor Smith have proposed a credit worth $34 million for owners of agricultural property equal to 40 percent of their property taxes attributable to school district debt levies.
  • Funding for Essential Services – Minnesotans rely on their municipal and county governments to provide essential services like police and fire protection. Even after investing additional funding in Local Government Aid (LGA) and County Program Aid (CPA) over the last several years, cities and counties have still not recovered from a decade of previous cuts. LGA and CPA funding is still lower than it was in 2002, causing local governments to raise property taxes to pay for these vital public services. Governor Dayton and Lt. Governor Smith have proposed a $30 million investment to support these important programs and relieve the burden on Minnesota property owners.
  • Investing in 21st Century Classrooms – All Minnesota students need a world-class education, no matter where they live. However, in school districts without high-value land, the burden of paying for modern schools can fall disproportionately on just a few businesses, farms, or homeowners. The Governor and Lt. Governor have proposed a $62 million investment over four years to help school districts repay school bond levies without overly burdening private property owners.


House Tax Chair Greg Davids says he likes some parts but says Republicans will do it differently.


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