HF 1915

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to education; reducing school district 
  1.3             property taxes; reducing the class rate for certain 
  1.4             agricultural property; increasing the income tax; 
  1.5             amending Minnesota Statutes 1994, section 124A.23, 
  1.6             subdivision 1; 273.13, subdivision 23; 290.06, 
  1.7             subdivisions 2c and 2d; and 290.091, subdivisions 1, 
  1.8             2, and 6. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1994, section 124A.23, 
  1.11  subdivision 1, is amended to read: 
  1.12     Subdivision 1.  [GENERAL EDUCATION TAX RATE.] The 
  1.13  commissioner shall establish the general education tax rate by 
  1.14  July 1 of each year for levies payable in the following year.  
  1.15  The general education tax capacity rate shall be a rate, rounded 
  1.16  up to the nearest tenth of a percent, that, when applied to the 
  1.17  adjusted net tax capacity for all districts, raises the amount 
  1.18  specified in this subdivision.  The general education tax rate 
  1.19  shall be the rate that raises $1,044,000,000 for fiscal year 
  1.20  1995 and, $1,054,000,000 for fiscal year 1996 and $654,000,000 
  1.21  for fiscal year 1997 and later fiscal years.  The general 
  1.22  education tax rate may not be changed due to changes or 
  1.23  corrections made to a district's adjusted net tax capacity after 
  1.24  the tax rate has been established.  
  1.25     Sec. 2.  Minnesota Statutes 1994, section 273.13, 
  1.26  subdivision 23, is amended to read: 
  1.27     Subd. 23.  [CLASS 2.] (a) Class 2a property is agricultural 
  2.1   land including any improvements that is homesteaded.  The market 
  2.2   value of the house and garage and immediately surrounding one 
  2.3   acre of land has the same class rates as class 1a property under 
  2.4   subdivision 22.  The value of the remaining land including 
  2.5   improvements up to $115,000 has a net class rate of .45 .25 
  2.6   percent of market value and a gross class rate of 1.75 percent 
  2.7   of market value.  The remaining value of class 2a property over 
  2.8   $115,000 of market value that does not exceed 320 acres has a 
  2.9   net class rate of one .5 percent of market value, and a gross 
  2.10  class rate of 2.25 percent of market value.  The remaining 
  2.11  property over the $115,000 market value in excess of 320 acres 
  2.12  has a class rate of 1.5 .75 percent of market value, and a gross 
  2.13  class rate of 2.25 percent of market value.  
  2.14     (b) Class 2b property is (1) real estate, rural in 
  2.15  character and used exclusively for growing trees for timber, 
  2.16  lumber, and wood and wood products; (2) real estate that is not 
  2.17  improved with a structure and is used exclusively for growing 
  2.18  trees for timber, lumber, and wood and wood products, if the 
  2.19  owner has participated or is participating in a cost-sharing 
  2.20  program for afforestation, reforestation, or timber stand 
  2.21  improvement on that particular property, administered or 
  2.22  coordinated by the commissioner of natural resources; (3) real 
  2.23  estate that is nonhomestead agricultural land; or (4) a landing 
  2.24  area or public access area of a privately owned public use 
  2.25  airport.  Class 2b property has a net class rate of 1.5 .75 
  2.26  percent of market value, and a gross class rate of 2.25 percent 
  2.27  of market value.  
  2.28     (c) Agricultural land as used in this section means 
  2.29  contiguous acreage of ten acres or more, primarily used during 
  2.30  the preceding year for agricultural purposes.  Agricultural use 
  2.31  may include pasture, timber, waste, unusable wild land, and land 
  2.32  included in state or federal farm programs.  "Agricultural 
  2.33  purposes" as used in this section means the raising or 
  2.34  cultivation of agricultural products.  
  2.35     (d) Real estate of less than ten acres used principally for 
  2.36  raising or cultivating agricultural products, shall be 
  3.1   considered as agricultural land, if it is not used primarily for 
  3.2   residential purposes.  
  3.3      (e) The term "agricultural products" as used in this 
  3.4   subdivision includes:  
  3.5      (1) livestock, dairy animals, dairy products, poultry and 
  3.6   poultry products, fur-bearing animals, horticultural and nursery 
  3.7   stock described in sections 18.44 to 18.61, fruit of all kinds, 
  3.8   vegetables, forage, grains, bees, and apiary products by the 
  3.9   owner; 
  3.10     (2) fish bred for sale and consumption if the fish breeding 
  3.11  occurs on land zoned for agricultural use; 
  3.12     (3) the commercial boarding of horses if the boarding is 
  3.13  done in conjunction with raising or cultivating agricultural 
  3.14  products as defined in clause (1); 
  3.15     (4) property which is owned and operated by nonprofit 
  3.16  organizations used for equestrian activities, excluding racing; 
  3.17  and 
  3.18     (5) game birds and waterfowl bred and raised for use on a 
  3.19  shooting preserve licensed under section 97A.115.  
  3.20     (f) If a parcel used for agricultural purposes is also used 
  3.21  for commercial or industrial purposes, including but not limited 
  3.22  to:  
  3.23     (1) wholesale and retail sales; 
  3.24     (2) processing of raw agricultural products or other goods; 
  3.25     (3) warehousing or storage of processed goods; and 
  3.26     (4) office facilities for the support of the activities 
  3.27  enumerated in clauses (1), (2), and (3), 
  3.28  the assessor shall classify the part of the parcel used for 
  3.29  agricultural purposes as class 1b, 2a, or 2b, whichever is 
  3.30  appropriate, and the remainder in the class appropriate to its 
  3.31  use.  The grading, sorting, and packaging of raw agricultural 
  3.32  products for first sale is considered an agricultural purpose.  
  3.33  A greenhouse or other building where horticultural or nursery 
  3.34  products are grown that is also used for the conduct of retail 
  3.35  sales must be classified as agricultural if it is primarily used 
  3.36  for the growing of horticultural or nursery products from seed, 
  4.1   cuttings, or roots and occasionally as a showroom for the retail 
  4.2   sale of those products.  Use of a greenhouse or building only 
  4.3   for the display of already grown horticultural or nursery 
  4.4   products does not qualify as an agricultural purpose.  
  4.5      The assessor shall determine and list separately on the 
  4.6   records the market value of the homestead dwelling and the one 
  4.7   acre of land on which that dwelling is located.  If any farm 
  4.8   buildings or structures are located on this homesteaded acre of 
  4.9   land, their market value shall not be included in this separate 
  4.10  determination.  
  4.11     (g) To qualify for classification under paragraph (b), 
  4.12  clause (4), a privately owned public use airport must be 
  4.13  licensed as a public airport under section 360.018.  For 
  4.14  purposes of paragraph (b), clause (4), "landing area" means that 
  4.15  part of a privately owned public use airport properly cleared, 
  4.16  regularly maintained, and made available to the public for use 
  4.17  by aircraft and includes runways, taxiways, aprons, and sites 
  4.18  upon which are situated landing or navigational aids.  A landing 
  4.19  area also includes land underlying both the primary surface and 
  4.20  the approach surfaces that comply with all of the following:  
  4.21     (i) the land is properly cleared and regularly maintained 
  4.22  for the primary purposes of the landing, taking off, and taxiing 
  4.23  of aircraft; but that portion of the land that contains 
  4.24  facilities for servicing, repair, or maintenance of aircraft is 
  4.25  not included as a landing area; 
  4.26     (ii) the land is part of the airport property; and 
  4.27     (iii) the land is not used for commercial or residential 
  4.28  purposes. 
  4.29  The land contained in a landing area under paragraph (b), clause 
  4.30  (4), must be described and certified by the commissioner of 
  4.31  transportation.  The certification is effective until it is 
  4.32  modified, or until the airport or landing area no longer meets 
  4.33  the requirements of paragraph (b), clause (4).  For purposes of 
  4.34  paragraph (b), clause (4), "public access area" means property 
  4.35  used as an aircraft parking ramp, apron, or storage hangar, or 
  4.36  an arrival and departure building in connection with the airport.
  5.1      Sec. 3.  Minnesota Statutes 1994, section 290.06, 
  5.2   subdivision 2c, is amended to read: 
  5.3      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  5.4   AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  5.5   married individuals filing joint returns and surviving spouses 
  5.6   as defined in section 2(a) of the Internal Revenue Code must be 
  5.7   computed by applying to their taxable net income the following 
  5.8   schedule of rates: 
  5.9      (1) On the first $19,910 $10,000, 6 percent; 
  5.10     (2) On all over $19,910 $10,000, but not 
  5.11  over $79,120 $20,000, 8 7 percent; 
  5.12     (3) On all over $79,120 $20,000 but not over $30,000, 8.5 8 
  5.13  percent; 
  5.14     (4) On all over $30,000, but not over $50,000, 9 percent; 
  5.15     (5) On all over $50,000, 10 percent. 
  5.16     Married individuals filing separate returns, estates, and 
  5.17  trusts must compute their income tax by applying the above rates 
  5.18  to their taxable income, except that the income brackets will be 
  5.19  one-half of the above amounts.  
  5.20     (b) The income taxes imposed by this chapter upon unmarried 
  5.21  individuals must be computed by applying to taxable net income 
  5.22  the following schedule of rates: 
  5.23     (1) On the first $13,620 $6,840, 6 percent; 
  5.24     (2) On all over $13,620 $6,840, but not 
  5.25  over $44,750 $13,680, 8 7 percent; 
  5.26     (3) On all over $44,750 $13,680, but not over $20,530, 8.5 
  5.27  8 percent; 
  5.28     (4) On all over $20,530, but not over $28,280, 9 percent; 
  5.29     (5) On all over $28,280, 10 percent. 
  5.30     (c) The income taxes imposed by this chapter upon unmarried 
  5.31  individuals qualifying as a head of household as defined in 
  5.32  section 2(b) of the Internal Revenue Code must be computed by 
  5.33  applying to taxable net income the following schedule of rates: 
  5.34     (1) On the first $16,770 $8,420, 6 percent; 
  5.35     (2) On all over $16,770 $8,420, but not 
  5.36  over $67,390 $16,840, 8 7 percent; 
  6.1      (3) On all over $67,390 $16,840 but not over $25,260, 8.5 8 
  6.2   percent; 
  6.3      (4) On all over $25,260 but not over $42,580, 9 percent; 
  6.4      (5) On all over $42,580, 10 percent. 
  6.5      (d) In lieu of a tax computed according to the rates set 
  6.6   forth in this subdivision, the tax of any individual taxpayer 
  6.7   whose taxable net income for the taxable year is less than an 
  6.8   amount determined by the commissioner must be computed in 
  6.9   accordance with tables prepared and issued by the commissioner 
  6.10  of revenue based on income brackets of not more than $100.  The 
  6.11  amount of tax for each bracket shall be computed at the rates 
  6.12  set forth in this subdivision, provided that the commissioner 
  6.13  may disregard a fractional part of a dollar unless it amounts to 
  6.14  50 cents or more, in which case it may be increased to $1. 
  6.15     (e) An individual who is not a Minnesota resident for the 
  6.16  entire year must compute the individual's Minnesota income tax 
  6.17  as provided in this subdivision.  After the application of the 
  6.18  nonrefundable credits provided in this chapter, the tax 
  6.19  liability must then be multiplied by a fraction in which:  
  6.20     (1) The numerator is the individual's Minnesota source 
  6.21  federal adjusted gross income as defined in section 62 of the 
  6.22  Internal Revenue Code after applying the allocation and 
  6.23  assignability provisions of section 290.081, clause (a), or 
  6.24  290.17; and 
  6.25     (2) the denominator is the individual's federal adjusted 
  6.26  gross income as defined in section 62 of the Internal Revenue 
  6.27  Code of 1986, as amended through December 31, 1993, increased by 
  6.28  the addition required for interest income from non-Minnesota 
  6.29  state and municipal bonds under section 290.01, subdivision 19a, 
  6.30  clause (1). 
  6.31     Sec. 4.  Minnesota Statutes 1994, section 290.06, 
  6.32  subdivision 2d, is amended to read: 
  6.33     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  6.34  taxable years beginning after December 31, 1991 1996, the 
  6.35  minimum and maximum dollar amounts for each rate bracket for 
  6.36  which a tax is imposed in subdivision 2c shall be adjusted for 
  7.1   inflation by the percentage determined under paragraph (b).  For 
  7.2   the purpose of making the adjustment as provided in this 
  7.3   subdivision all of the rate brackets provided in subdivision 2c 
  7.4   shall be the rate brackets as they existed for taxable years 
  7.5   beginning after December 31, 1990 1995, and before January 
  7.6   1, 1992 1997.  The rate applicable to any rate bracket must not 
  7.7   be changed.  The dollar amounts setting forth the tax shall be 
  7.8   adjusted to reflect the changes in the rate brackets.  The rate 
  7.9   brackets as adjusted must be rounded to the nearest $10 amount.  
  7.10  If the rate bracket ends in $5, it must be rounded up to the 
  7.11  nearest $10 amount.  
  7.12     (b) The commissioner shall adjust the rate brackets and by 
  7.13  the percentage determined pursuant to the provisions of section 
  7.14  1(f) of the Internal Revenue Code, except that in section 
  7.15  1(f)(3)(B) the word "1990" shall be substituted for the word 
  7.16  "1987."  For 1991 1997, the commissioner shall then determine 
  7.17  the percent change from the 12 months ending on August 31, 1990 
  7.18  1998, to the 12 months ending on August 31, 1991 1997, and in 
  7.19  each subsequent year, from the 12 months ending on August 31, 
  7.20  1990, to the 12 months ending on August 31 of the year preceding 
  7.21  the taxable year.  The determination of the commissioner 
  7.22  pursuant to this subdivision shall not be considered a "rule" 
  7.23  and shall not be subject to the administrative procedure act 
  7.24  contained in chapter 14.  
  7.25     No later than December 15 of each year, the commissioner 
  7.26  shall announce the specific percentage that will be used to 
  7.27  adjust the tax rate brackets. 
  7.28     Sec. 5.  Minnesota Statutes 1994, section 290.091, 
  7.29  subdivision 1, is amended to read: 
  7.30     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
  7.31  other taxes imposed by this chapter a tax is imposed on 
  7.32  individuals, estates, and trusts equal to the excess (if any) of 
  7.33     (a) an amount equal to seven nine percent of alternative 
  7.34  minimum taxable income after subtracting the exemption amount, 
  7.35  over 
  7.36     (b) the regular tax for the taxable year. 
  8.1      Sec. 6.  Minnesota Statutes 1994, section 290.091, 
  8.2   subdivision 2, is amended to read: 
  8.3      Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  8.4   this section, the following terms have the meanings given: 
  8.5      (a) "Alternative minimum taxable income" means the sum of 
  8.6   the following for the taxable year: 
  8.7      (1) the taxpayer's federal alternative minimum taxable 
  8.8   income as defined in section 55(b)(2) of the Internal Revenue 
  8.9   Code; 
  8.10     (2) the taxpayer's itemized deductions allowed in computing 
  8.11  federal alternative minimum taxable income, but excluding the 
  8.12  Minnesota charitable contribution deduction and the medical 
  8.13  expense deduction; 
  8.14     (3) for depletion allowances computed under section 613A(c) 
  8.15  of the Internal Revenue Code, with respect to each property (as 
  8.16  defined in section 614 of the Internal Revenue Code), to the 
  8.17  extent not included in federal alternative minimum taxable 
  8.18  income, the excess of the deduction for depletion allowable 
  8.19  under section 611 of the Internal Revenue Code for the taxable 
  8.20  year over the adjusted basis of the property at the end of the 
  8.21  taxable year (determined without regard to the depletion 
  8.22  deduction for the taxable year); 
  8.23     (4) to the extent not included in federal alternative 
  8.24  minimum taxable income, the amount of the tax preference for 
  8.25  intangible drilling cost under section 57(a)(2) of the Internal 
  8.26  Revenue Code determined without regard to subparagraph (E); 
  8.27     (5) to the extent not included in federal alternative 
  8.28  minimum taxable income, the amount of interest income as 
  8.29  provided by section 290.01, subdivision 19a, clause (1); 
  8.30     less the sum of the amounts determined under the following 
  8.31  clauses (1) to (3): 
  8.32     (1) interest income as defined in section 290.01, 
  8.33  subdivision 19b, clause (1); 
  8.34     (2) an overpayment of state income tax as provided by 
  8.35  section 290.01, subdivision 19b, clause (2), to the extent 
  8.36  included in federal alternative minimum taxable income; and 
  9.1      (3) the amount of investment interest paid or accrued 
  9.2   within the taxable year on indebtedness to the extent that the 
  9.3   amount does not exceed net investment income, as defined in 
  9.4   section 163(d)(4) of the Internal Revenue Code.  Interest does 
  9.5   not include amounts deducted in computing federal adjusted gross 
  9.6   income. 
  9.7      In the case of an estate or trust, alternative minimum 
  9.8   taxable income must be computed as provided in section 59(c) of 
  9.9   the Internal Revenue Code. 
  9.10     (b) "Investment interest" means investment interest as 
  9.11  defined in section 163(d)(3) of the Internal Revenue Code. 
  9.12     (c) "Tentative minimum tax" equals seven nine percent of 
  9.13  alternative minimum taxable income after subtracting the 
  9.14  exemption amount determined under subdivision 3. 
  9.15     (d) "Regular tax" means the tax that would be imposed under 
  9.16  this chapter (without regard to this section and section 
  9.17  290.032), reduced by the sum of the nonrefundable credits 
  9.18  allowed under this chapter.  
  9.19     (e) "Net minimum tax" means the minimum tax imposed by this 
  9.20  section. 
  9.21     (f) "Minnesota charitable contribution deduction" means a 
  9.22  charitable contribution deduction under section 170 of the 
  9.23  Internal Revenue Code to or for the use of an entity described 
  9.24  in section 290.21, subdivision 3, clauses (a) to (e). 
  9.25     Sec. 7.  Minnesota Statutes 1994, section 290.091, 
  9.26  subdivision 6, is amended to read: 
  9.27     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
  9.28  is allowed against the tax imposed by this chapter on 
  9.29  individuals, trusts, and estates equal to the minimum tax credit 
  9.30  for the taxable year.  The minimum tax credit equals the 
  9.31  adjusted net minimum tax for taxable years beginning after 
  9.32  December 31, 1988, reduced by the minimum tax credits allowed in 
  9.33  a prior taxable year.  The credit may not exceed the excess (if 
  9.34  any) for the taxable year of 
  9.35     (1) the regular tax, over 
  9.36     (2) the greater of (i) the tentative alternative minimum 
 10.1   tax, or (ii) zero. 
 10.2      (b) The adjusted net minimum tax for a taxable year equals 
 10.3   the lesser of the net minimum tax or the excess (if any) of 
 10.4      (1) the tentative minimum tax, over 
 10.5      (2) seven nine percent of the sum of 
 10.6      (i) adjusted gross income as defined in section 62 of the 
 10.7   Internal Revenue Code, 
 10.8      (ii) interest income as defined in section 290.01, 
 10.9   subdivision 19a, clause (1), 
 10.10     (iii) interest on specified private activity bonds, as 
 10.11  defined in section 57(a)(5) of the Internal Revenue Code, to the 
 10.12  extent not included under clause (ii), 
 10.13     (iv) depletion as defined in section 57(a)(1), determined 
 10.14  without regard to the last sentence of paragraph (1), of the 
 10.15  Internal Revenue Code, less 
 10.16     (v) the deductions provided in subdivision 2, paragraph 
 10.17  (a), clauses (5), items (i), (ii), and (iii), and 
 10.18     (vi) the exemption amount determined under subdivision 3. 
 10.19     In the case of an individual who is not a Minnesota 
 10.20  resident for the entire year, adjusted net minimum tax must be 
 10.21  multiplied by the fraction defined in section 290.06, 
 10.22  subdivision 2c, paragraph (e).  In the case of a trust or 
 10.23  estate, adjusted net minimum tax must be multiplied by the 
 10.24  fraction defined under subdivision 4, paragraph (b). 
 10.25     Sec. 8.  [EFFECTIVE DATE.] 
 10.26     Section 2 is effective for taxes payable in 1996 and 
 10.27  subsequent years.  Sections 3 to 7 are effective for tax years 
 10.28  beginning after December 31, 1995.