Repealing Minnesota’s Social Security income tax is a top priority for Republican state legislators looking to keep the state’s snowbird population low.
On Tuesday, the Senate’s Taxation Committee held a hearing on a number of proposals to either reduce or eliminate the tax. State Senator Carla Nelson, the panel’s leader, projected that her proposal would be easily passed by the Republican-controlled Senate despite the fact that the panel did not approve any of the proposals.
410,000 seniors would save an average of $1,313 per year if Nelson’s plan becomes law, according to nonpartisan legislative researchers. Tax income would be lost by over $600 million year if this happened. Social Security benefits would be tax-free in Minnesota, joining 37 other states.
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The Rochester Republican, Don Nelson, remarked, “I don’t believe we should tax pensioners either. That’s a big deal for our state, but I believe that the retirees paid for these benefits.”
Republicans have been advocating this tax break for years, arguing that the current expected budget surplus of $7.7 billion makes it an ideal time to implement it. To help lawmakers figure out how much money they can spend on tax cuts and new programmes in the coming weeks, the Minnesota budget office is expected to present an updated prediction Monday.
Concerns about a shortfall in state funding for programmes for low-income residents were highlighted during Tuesday’s session.
Full repeal may not leave us with enough money to sustain senior programmes, says Mary Jo George of Minnesota AARP. The advocacy group supports tax breaks for middle-aged taxpayers.
Because Minnesota already exempts $5,500 in benefits, nonpartisan House analysts estimate that about 55 percent of Social Security claimants do not pay the state’s levy.
Benefits that are taxed at a higher rate apply to those who earn more money. Liberals said that the GOP plan would help wealthy retirees.
Doctor Matt Klein, DFL-Mendota Heights state senator, said, “The state of Minnesota would be ill-advised to award this tax benefit to me in eight years on money they could put in health care, child care, transportation, public care facilities, and parks.
Even still, Democrats aren’t completely opposed to increasing the Social Security tax deduction.
First $11,000 of benefits would be doubled under the proposal of state senator Ann Rest, DFL-New Hope. 298,000 people would save an average of $264 a year if the suggestion is implemented as a result of nonpartisan research. About $90 million would be spent on her every year.
More than only taxes are lost when well-off elderly residents leave Minnesota, advocates of reform claim.
Bill Weber, R-Luverne, a state senator, says he’s tired of losing the quality and talent of retirees because “it isn’t just their money we’re concerned with.” In addition, “It’s because of the various things they contribute to our community.”