By Rep. Paul Anderson
The Tax Division in the Minnesota House heard bills last week that would move Minnesota into compliance with federal law as it pertains to Section 179 expensing. Currently, business owners here can only depreciate $25,000 of a capital expense in the year it was purchased, while the federal tax code allows fast depreciation of up to $1 million per year. This becomes even more important for farmers and other business owners now that the rules for like-kind exchanges have been modified. Beginning with tax year 2018, the value of equipment "traded in" on new equipment will be considered income. So, being able to depreciate this so-called income becomes even more important.
This conformity piece was part of the tax bill passed by the Legislature in 2018, but unfortunately, it was vetoed by Gov. Dayton. It will be nearly impossible now to enact changes in time for filing this year. It's hoped that any changes made will be done retro-actively so those affected could file amended tax returns for 2018. Most farmers file their taxes by March 1, while others have until April 15 to file their returns.
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Read with interest about a new law in California requiring all new homes constructed in the state to have solar panels. It's a first-in-the-nation mandate that will add around $8,000 to the already sky-high cost of building a home in the Golden State. What makes this especially newsworthy for us in Minnesota is that many of the more strict environmental and clean air requirements that we debate in our state were first tried in California. Case in point; a bill has been introduced here that would require all electric generation in Minnesota to come from renewable sources by the year 2050. California has that same goal, only their timeline is a bit more aggressive with their target being 2045 for 100 percent carbon emission-free electricity.
Several aspects of these mandates concern me. First, let the market take us there. The cost of wind generation has come down dramatically, and it now rivals the cost of traditional sources of power. Power companies are already way ahead of Minnesota's first attempt to drive the market with our 25 percent mandate by the year 2025. Many have already surpassed that goal, and it's the market price of electric generation that's driving this push.
In addition, it's not wise to rely solely on one or two sources for all your power. In our recent polar vortex, wind towers were being shut down because the extreme temperatures made lubrication of the turbine gear boxes difficult. And I'm amazed while driving around observing the community solar gardens that have sprung up around the district. Many of them have panels that are covered with snow, or at least they're partially covered. How can that be efficient? Between our short winter days and the propensity for cloudy conditions during winter months, coming up with a payback for something like the California mandate for the installation of solar panels would be challenging.
I appreciate the lights coming on when I flip the switch. I like my furnace working properly when it's -30 degrees outside. Oftentimes we take our energy sources for granted, but we all rely heavily on then. Like having a dependable supply of gas and diesel fuel to power our vehicles, and having the fuel truck bring propane or fuel oil to keep our houses warm. All these things are more difficult to deliver in these tough winter conditions, and they may be a bit more expensive because the supply is being stretched. These folks keep us going. They assist us in keeping our livestock warm, and in short, they help us maintain our lifestyles in these frigid winter conditions.
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