hf42 graph

Hoppe, Leidiger vote to raise your property taxes and cut taxes for the wealthy

The Minnesota State House of Representatives passed H.F. 42 — the omnibus tax bill — last night by a vote of 73-59.  The bill has the following key provisions:

  • a three-year phased-in income tax cut for the lower two brackets
  • nearly $700 million in reductions to local government aid
  • reductions in the renters property tax refund program totaling about $350 million
  • reduces the statewide business property tax levy
  • applies levy limits for the next two years

According to the State Department of Revenue, this bill will have the following impacts on Minnesota taxpayers:

  • Property taxes will increase by $859 million over the next three years because of the reductions in local government aid
  • 38,000 renters will no longer receive property tax refunds, and for those who continue to receive refunds, the average refund will drop from $643 to $343
  • Net property taxes for all classes of property will increase.  Even with the cuts to the business property levy, the cuts to LGA will force increases at the city and county level that will more than make up for those cuts.
  • Property taxes will increase by 4.3% statewide – 3.7% in the metro, 5.3% in outstate Minnesota.
  • Local governments will be forced to cut $230 million in spending each year.

Additionally, property tax income would total more than income tax income for the first time since 1996.  Why is this important?  Because the property tax is horribly regressive.  Let’s look at how these proposals affect groups of different income levels.

That’s right — the benefits accumulate to those at the top of the income scale.  In fact, 47% of the tax relief in this bill goes to the top 20% of earners

On top of that, the bottom 40% of income earners will see an increase in their net tax burden under this bill, while taxpayers in the upper half of the scale will accrue the largest benefit.

Carver County’s House delegation, Joe Hoppe (34B) and Ernie Leidiger (34A) both voted for this bill. 

They will try to tell you it’s a significant tax cut for the poor and middle class — it isn’t.  As shown above, it’s really another tax cut for the wealthy.  (And, if you’re a renter, you’re really taking a hit.)

They will try to tell you it’s part of balancing the budget without raising taxes — don’t be fooled.  Your taxes are going to go up significantly as a result of this bill.

They will try to tell you your local property taxes don’t need to be increased as result of their deep cuts to local government — they are wrong.  Unless you think things like public safety and road maintenance are optional.

Hoppe and Leidiger, with this vote, showed where their allegiances lie — they are putting the narrow ideology of their party ahead of the needs of Carver County’s working families.

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10 Responses to “Hoppe, Leidiger vote to raise your property taxes and cut taxes for the wealthy”

  1. Interesting analysis. Can you give some more information on the sources of the two graphs shown? I am not familiar with “DOR Incidence Analysis 3/25/2011″. Who authored it, and can you please show me where I can obtain a copy?

    On the second graph, what are the equations used to calculate the third and fourth columns? Are these data from the same source?

    • The source for both of those graphs is the Department of Revenue letter sent to Rep. Greg Davids, the author of H.F. 42. It’s available at the following link (also in the original post):

      There’s a supplemental document that has additional detail behind the calculations in the second graph. It’s available at:

      http://taxes.state.mn.us/legal_policy/Revenue_Analyses/HF0042%20Incidence%20Analysis_1.pdf

  2. Thanks for the links. I have a follow-up question regarding the first graph. It does not appear as though the y-axis data are normalized with respect to annual taxes paid per income group. In addition to how you have presented it, I would recommend plotting the data as follows:

    x_axis: reduction of annual income tax (in $) / annual income tax paid (in $)
    y_axis: MN residents by Income Decile

    On a side note, I tried to “subscribe via email” to the comments for this post, but I did not receive an email when the second comment was left. Any help on this would be great.

    • If you’re not a WordPress user, it’s supposed to send you an e-mail that you have to confirm before you get the additional comments. It looks from what I can see like you’ve signed up correctly.

      The graph you suggest would show a peak in the lower-middle part of the distribution then decrease at the higher income levels, but I don’t have the exact figures in front of me.

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