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Legislative Update - February 18, 2013
Another week at the Legislature has begun and activity is starting to pick up as we passed our first pieces of legislation. As when I served in past years I am asking for your feedback on a legislative survey. I need your input on a variety of topics to help me make the best decisions for our community and Minnesota's future.
You can find my survey online by visiting here. If you would like a paper copy to fill out, please contact my office at 651-296-3533 or email me at email@example.com and we would be happy to send you a paper copy of the survey to fill out and return to my office. I look forward to hearing from you.
The House unanimously passed HF 6, known as Federal Tax Conformity
, which adds clarity and simplicity to Minnesota's tax system by conforming to federal tax changes made in 2012. These changes will result in tax relief for middle class Minnesotans, including 55,000 teachers, 90,000 homeowners, 60,000 students and 32,000 small business owners.
Why does Minnesota need federal tax conformity?
Congress' late enactment of the American Taxpayer Relief Act of 2012 has created potential problems for Minnesota taxpayers who qualify for the tax year 2012 federal changes and want to file their Minnesota taxes. The problem is that the new federal tax changes allow deductions that are not currently allowed under Minnesota's tax system.
Without this legislation, each taxpayer who claims any of the affected deductions will need to file a special form to calculate their Minnesota income tax liability. These taxpayers would need to "add back" the federal deductions and include that amount in their Minnesota income tax liability. All of this adds up to a lot of unnecessary confusion and problems.
If Minnesota does conform to the new changes, then Minnesotans would likely not need to change forms and taxpayers could file without making additional adjustments.
How many Minnesotans will be affected by federal tax conformity?
Over 250,000 tax returns will be affected. Affected taxpayers include:
- 55,000 teachers who claim the $250 educator expense deduction
- 90,000 homeowners who claim an itemized deduction for mortgage insurance premiums
- 60,000 students or parents of students who take up to $4,000 for the higher education tuition and fee deduction
- 32,000 small business owners who quality for Section 179 expensing
- Unknown number of seniors who would need to recalculate the amount of Social Security benefits that would be taxable in Minnesota, which would exceed the amount taxed federally because they would not qualify for the IRA distributions to public charities if age 70½ or older.
Conforming to federal tax year 2012 provisions provides simplicity and clarity for taxpayers.
Expansion of Medical Assistance
On Monday, the House also passed HF 9 in a bipartisan vote, an expansion of Medical Assistance, which would reduce the number of Minnesotans without health insurance. Medical Assistance is Minnesota's Medicaid program. This bill would expand Medical Assistance to Minnesotans with income up to 133 percent of the federal poverty guidelines. As a result, over 40,000 currently uninsured Minnesotans will be covered by insurance by 2016.
The federal government will be paying most of the cost, so while we will be insuring 40,000 more people, we'll be saving $129 million in this biennium and another $237 million in the next biennium.
Because more Minnesotans will be covered by health insurance, this will also reduce costly uncompensated care for the uninsured in Emergency Rooms. This reduces the hidden tax that is passed onto Minnesotans who do have health insurance and bear the cost for uncompensated care.
Please feel free to contact me directly with any questions, comments, or concerns on any legislative issue. You can reach me by phone at (651) 296-3533 or email me at firstname.lastname@example.org. Thank you for the honor of serving you in the Minnesota House of Representatives.