By Rep. Paul Anderson
With the recent release of Gov. Mark Dayton’s tax plan, much talk and speculation centered on what the House Republican plan would look like. Work on producing another tax bill this year became a top priority because of the massive overhaul of the federal tax code this past December. Without some sort of reform at the state level, Minnesota residents are on the hook to pay millions more in state income tax because of changes made at the federal level.
While the governor’s plan would do away with several provisions that became law just last year, including the elimination of the automatic inflator on the statewide commercial property tax, our plan would utilize over $100 million of surplus money to lower several taxes. Among its features is an actual cut in the second-tier tax rate from 7.05 down to 6.75 by tax year 2020. The standard deduction would be increased by a thousand dollars to $14,000, and a total of $30,000 of property tax payments could be itemized.
Farmers and others in the business of purchasing machinery would see the state Section 179 fast depreciation increase up to federal conformity. This is an especially important item since the federal tax code has changed the way like-kind trading of equipment is handled. Going forward, the value of used equipment traded in on new capital purchases will be treated as income. The federal tax code increased the upper limit on Section 179 expensing to $1 million, and we at the state level must also increase our level to at least cover the value of equipment that’s traded in. At this point, our plan is to fully conform with the new federal level of expensing, something farmers and other business owners have been requesting for years.
Federal tax reform gives us a chance to simplify our state tax code. The goal has always been to hold as many Minnesotans as harmless as possible and also to prevent problems for income tax filers next year. By utilizing our budget surplus, this proposal delivers broad tax relief and the first income tax rate cut in nearly 20 years. The bill is scheduled to be heard this week in the House Tax Committee.
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Several local firefighters visited my office recently, and we had a good discussion about volunteer fire departments and the issues they have in recruiting new members. According to statistics they left with me, our state is second in the nation in terms of the percentage of volunteer fire departments. In Minnesota, 93 percent of all departments are made up of volunteers. The age breakdown, according to the Volunteer Relief Association, has the highest number of firefighters, 45 percent, ranging in age from 35 to 49. Next highest category is 27 percent between the ages of 25 and 34. The veterans on the departments, ranging in age from 50-59, make up 18 percent of all firefighters in Minnesota.
It was amazing to learn the cost to train and equip a firefighter. According to the National Volunteer Fire Council, training a new firefighter costs just under $8,000. Other high-ticket items include breathing apparatus at $6,300 and radios at $3,700. Coats and pants together run around $2,000, while helmets and boots are another $600. All totaled, the cost of training and equipment per person runs just over $27,000.
We are fortunate to have many volunteers serving our towns and cities. It’s a real time commitment, especially for new fire fighters getting up to speed with their training. We say “thanks” to all for providing this important service.
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