HF 2322

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; reducing certain individual 
  1.3             income tax rates; reducing the general education tax 
  1.4             rate; providing a property tax rebate for taxes 
  1.5             assessed in 1997; appropriating money; amending 
  1.6             Minnesota Statutes 1996, sections 290.06, subdivisions 
  1.7             2c and 2d; and 290.091, subdivisions 1 and 2; 
  1.8             Minnesota Statutes 1997 Supplement, sections 16A.152, 
  1.9             subdivision 2; and 290.091, subdivision 6; proposing 
  1.10            coding for new law in Minnesota Statutes, chapter 16A. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1997 Supplement, section 
  1.13  16A.152, subdivision 2, is amended to read: 
  1.14     Subd. 2.  [ADDITIONAL REVENUES; PRIORITY PRIORITIES.] (a) 
  1.15  If on the basis of a forecast of general fund revenues and 
  1.16  expenditures after November 1 in an odd-numbered year, the 
  1.17  commissioner of finance determines that there will be a positive 
  1.18  unrestricted budgetary general fund balance at the close of the 
  1.19  biennium, the commissioner of finance must allocate money as 
  1.20  follows: 
  1.21     (a) (1) first, to the budget reserve until the total amount 
  1.22  in the account equals $522,000,000; then 
  1.23     (b) (2) 60 percent to the property tax reform account 
  1.24  established in section 16A.1521; and 
  1.25     (c) (3) 40 percent is an unrestricted balance in the 
  1.26  general fund. 
  1.27     (b) If on the basis of a forecast of general fund revenues 
  1.28  and expenditures after February 1 in an even-numbered year, the 
  2.1   commissioner of finance determines that there will be a positive 
  2.2   unrestricted budgetary general fund balance at the close of the 
  2.3   biennium that is in addition to the amount determined under 
  2.4   paragraph (a), the commissioner of finance shall allocate the 
  2.5   additional balance as follows:  (1) first to the budget reserve 
  2.6   until the total amount in the account equals $522,000,000 and 
  2.7   then (2) to the income tax reserve account established in 
  2.8   section 16A.1522. 
  2.9      (c) The amounts necessary to meet the requirements of this 
  2.10  section are appropriated from the general fund within two weeks 
  2.11  after the forecast is released. 
  2.12     Sec. 2.  [16A.1522] [INCOME TAX RESERVE ACCOUNT.] 
  2.13     (a) An income tax reserve account is established in the 
  2.14  general fund. 
  2.15     (b) Amounts in the account are only available for 
  2.16  proportional income tax rate reductions under section 290.06, 
  2.17  subdivision 2c.  The governor shall recommend to the legislature 
  2.18  uses of money in the account to reduce income tax rates.  
  2.19     (c) The balance in the account does not cancel and remains 
  2.20  in the account until appropriated for income tax rate reductions.
  2.21  Investment earnings on the account are credited to the account. 
  2.22     Sec. 3.  Minnesota Statutes 1996, section 290.06, 
  2.23  subdivision 2c, is amended to read: 
  2.24     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  2.25  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  2.26  married individuals filing joint returns and surviving spouses 
  2.27  as defined in section 2(a) of the Internal Revenue Code must be 
  2.28  computed by applying to their taxable net income the following 
  2.29  schedule of rates: 
  2.30     (1) On the first $19,910 $23,500, 6 5.35 percent; 
  2.31     (2) On all over $19,910 $23,500, but not 
  2.32  over $79,120 $98,540, 8 7.5 percent; 
  2.33     (3) On all over $79,120 $98,540, 8.5 percent. 
  2.34     Married individuals filing separate returns, estates, and 
  2.35  trusts must compute their income tax by applying the above rates 
  2.36  to their taxable income, except that the income brackets will be 
  3.1   one-half of the above amounts.  
  3.2      (b) The income taxes imposed by this chapter upon unmarried 
  3.3   individuals must be computed by applying to taxable net income 
  3.4   the following schedule of rates: 
  3.5      (1) On the first $13,620 $16,070, 6 5.35 percent; 
  3.6      (2) On all over $13,620 $16,070, but not 
  3.7   over $44,750 $55,730, 8 7.5 percent; 
  3.8      (3) On all over $44,750 $55,730, 8.5 percent. 
  3.9      (c) The income taxes imposed by this chapter upon unmarried 
  3.10  individuals qualifying as a head of household as defined in 
  3.11  section 2(b) of the Internal Revenue Code must be computed by 
  3.12  applying to taxable net income the following schedule of rates: 
  3.13     (1) On the first $16,770 $19,790, 6 5.35 percent; 
  3.14     (2) On all over $16,770 $19,790, but not 
  3.15  over $67,390 $83,930, 8 7.5 percent; 
  3.16     (3) On all over $67,390 $83,930, 8.5 percent. 
  3.17     (d) In lieu of a tax computed according to the rates set 
  3.18  forth in this subdivision, the tax of any individual taxpayer 
  3.19  whose taxable net income for the taxable year is less than an 
  3.20  amount determined by the commissioner must be computed in 
  3.21  accordance with tables prepared and issued by the commissioner 
  3.22  of revenue based on income brackets of not more than $100.  The 
  3.23  amount of tax for each bracket shall be computed at the rates 
  3.24  set forth in this subdivision, provided that the commissioner 
  3.25  may disregard a fractional part of a dollar unless it amounts to 
  3.26  50 cents or more, in which case it may be increased to $1. 
  3.27     (e) An individual who is not a Minnesota resident for the 
  3.28  entire year must compute the individual's Minnesota income tax 
  3.29  as provided in this subdivision.  After the application of the 
  3.30  nonrefundable credits provided in this chapter, the tax 
  3.31  liability must then be multiplied by a fraction in which:  
  3.32     (1) The numerator is the individual's Minnesota source 
  3.33  federal adjusted gross income as defined in section 62 of the 
  3.34  Internal Revenue Code increased by the addition required for 
  3.35  interest income from non-Minnesota state and municipal bonds 
  3.36  under section 290.01, subdivision 19a, clause (1), after 
  4.1   applying the allocation and assignability provisions of section 
  4.2   290.081, clause (a), or 290.17; and 
  4.3      (2) the denominator is the individual's federal adjusted 
  4.4   gross income as defined in section 62 of the Internal Revenue 
  4.5   Code of 1986, as amended through April 15, 1995, increased by 
  4.6   the addition required for interest income from non-Minnesota 
  4.7   state and municipal bonds under section 290.01, subdivision 19a, 
  4.8   clause (1). 
  4.9      Sec. 4.  Minnesota Statutes 1996, section 290.06, 
  4.10  subdivision 2d, is amended to read: 
  4.11     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  4.12  taxable years beginning after December 31, 1991 1998, the 
  4.13  minimum and maximum dollar amounts for each rate bracket for 
  4.14  which a tax is imposed in subdivision 2c shall be adjusted for 
  4.15  inflation by the percentage determined under paragraph (b).  For 
  4.16  the purpose of making the adjustment as provided in this 
  4.17  subdivision all of the rate brackets provided in subdivision 2c 
  4.18  shall be the rate brackets as they existed for taxable years 
  4.19  beginning after December 31, 1990 1997, and before January 
  4.20  1, 1992 1999.  The rate applicable to any rate bracket must not 
  4.21  be changed.  The dollar amounts setting forth the tax shall be 
  4.22  adjusted to reflect the changes in the rate brackets.  The rate 
  4.23  brackets as adjusted must be rounded to the nearest $10 amount.  
  4.24  If the rate bracket ends in $5, it must be rounded up to the 
  4.25  nearest $10 amount.  
  4.26     (b) The commissioner shall adjust the rate brackets and by 
  4.27  the percentage determined pursuant to the provisions of section 
  4.28  1(f) of the Internal Revenue Code, except that in section 
  4.29  1(f)(3)(B) the word "1990 1997" shall be substituted for the 
  4.30  word "1987 1992."  For 1991 1998, the commissioner shall then 
  4.31  determine the percent change from the 12 months ending on August 
  4.32  31, 1990 1997, to the 12 months ending on August 31, 1991 1998, 
  4.33  and in each subsequent year, from the 12 months ending on August 
  4.34  31, 1990 1997, to the 12 months ending on August 31 of the year 
  4.35  preceding the taxable year.  The determination of the 
  4.36  commissioner pursuant to this subdivision shall not be 
  5.1   considered a "rule" and shall not be subject to the 
  5.2   administrative procedure act contained in chapter 14.  
  5.3      No later than December 15 of each year, the commissioner 
  5.4   shall announce the specific percentage that will be used to 
  5.5   adjust the tax rate brackets. 
  5.6      Sec. 5.  Minnesota Statutes 1996, section 290.091, 
  5.7   subdivision 1, is amended to read: 
  5.8      Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
  5.9   other taxes imposed by this chapter a tax is imposed on 
  5.10  individuals, estates, and trusts equal to the excess (if any) of 
  5.11     (a) an amount equal to seven 6.8 percent of alternative 
  5.12  minimum taxable income after subtracting the exemption amount, 
  5.13  over 
  5.14     (b) the regular tax for the taxable year. 
  5.15     Sec. 6.  Minnesota Statutes 1996, section 290.091, 
  5.16  subdivision 2, is amended to read: 
  5.17     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  5.18  this section, the following terms have the meanings given: 
  5.19     (a) "Alternative minimum taxable income" means the sum of 
  5.20  the following for the taxable year: 
  5.21     (1) the taxpayer's federal alternative minimum taxable 
  5.22  income as defined in section 55(b)(2) of the Internal Revenue 
  5.23  Code; 
  5.24     (2) the taxpayer's itemized deductions allowed in computing 
  5.25  federal alternative minimum taxable income, but excluding the 
  5.26  Minnesota charitable contribution deduction and the medical 
  5.27  expense deduction; 
  5.28     (3) for depletion allowances computed under section 613A(c) 
  5.29  of the Internal Revenue Code, with respect to each property (as 
  5.30  defined in section 614 of the Internal Revenue Code), to the 
  5.31  extent not included in federal alternative minimum taxable 
  5.32  income, the excess of the deduction for depletion allowable 
  5.33  under section 611 of the Internal Revenue Code for the taxable 
  5.34  year over the adjusted basis of the property at the end of the 
  5.35  taxable year (determined without regard to the depletion 
  5.36  deduction for the taxable year); 
  6.1      (4) to the extent not included in federal alternative 
  6.2   minimum taxable income, the amount of the tax preference for 
  6.3   intangible drilling cost under section 57(a)(2) of the Internal 
  6.4   Revenue Code determined without regard to subparagraph (E); 
  6.5      (5) to the extent not included in federal alternative 
  6.6   minimum taxable income, the amount of interest income as 
  6.7   provided by section 290.01, subdivision 19a, clause (1); 
  6.8      less the sum of the amounts determined under the following 
  6.9   clauses (1) to (3): 
  6.10     (1) interest income as defined in section 290.01, 
  6.11  subdivision 19b, clause (1); 
  6.12     (2) an overpayment of state income tax as provided by 
  6.13  section 290.01, subdivision 19b, clause (2), to the extent 
  6.14  included in federal alternative minimum taxable income; and 
  6.15     (3) the amount of investment interest paid or accrued 
  6.16  within the taxable year on indebtedness to the extent that the 
  6.17  amount does not exceed net investment income, as defined in 
  6.18  section 163(d)(4) of the Internal Revenue Code.  Interest does 
  6.19  not include amounts deducted in computing federal adjusted gross 
  6.20  income. 
  6.21     In the case of an estate or trust, alternative minimum 
  6.22  taxable income must be computed as provided in section 59(c) of 
  6.23  the Internal Revenue Code. 
  6.24     (b) "Investment interest" means investment interest as 
  6.25  defined in section 163(d)(3) of the Internal Revenue Code. 
  6.26     (c) "Tentative minimum tax" equals seven 6.8 percent of 
  6.27  alternative minimum taxable income after subtracting the 
  6.28  exemption amount determined under subdivision 3. 
  6.29     (d) "Regular tax" means the tax that would be imposed under 
  6.30  this chapter (without regard to this section and section 
  6.31  290.032), reduced by the sum of the nonrefundable credits 
  6.32  allowed under this chapter.  
  6.33     (e) "Net minimum tax" means the minimum tax imposed by this 
  6.34  section. 
  6.35     (f) "Minnesota charitable contribution deduction" means a 
  6.36  charitable contribution deduction under section 170 of the 
  7.1   Internal Revenue Code to or for the use of an entity described 
  7.2   in section 290.21, subdivision 3, clauses (a) to (e).  When the 
  7.3   federal deduction for charitable contributions is limited under 
  7.4   section 170(b) of the Internal Revenue Code, the allowable 
  7.5   contributions in the year of contribution are deemed to be first 
  7.6   contributions to entities described in section 290.21, 
  7.7   subdivision 3, clauses (a) to (e). 
  7.8      Sec. 7.  Minnesota Statutes 1997 Supplement, section 
  7.9   290.091, subdivision 6, is amended to read: 
  7.10     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
  7.11  is allowed against the tax imposed by this chapter on 
  7.12  individuals, trusts, and estates equal to the minimum tax credit 
  7.13  for the taxable year.  The minimum tax credit equals the 
  7.14  adjusted net minimum tax for taxable years beginning after 
  7.15  December 31, 1988, reduced by the minimum tax credits allowed in 
  7.16  a prior taxable year.  The credit may not exceed the excess (if 
  7.17  any) for the taxable year of 
  7.18     (1) the regular tax, over 
  7.19     (2) the greater of (i) the tentative alternative minimum 
  7.20  tax, or (ii) zero. 
  7.21     (b) The adjusted net minimum tax for a taxable year equals 
  7.22  the lesser of the net minimum tax or the excess (if any) of 
  7.23     (1) the tentative minimum tax, over 
  7.24     (2) seven 6.8 percent of the sum of 
  7.25     (i) adjusted gross income as defined in section 62 of the 
  7.26  Internal Revenue Code, 
  7.27     (ii) interest income as defined in section 290.01, 
  7.28  subdivision 19a, clause (1), 
  7.29     (iii) interest on specified private activity bonds, as 
  7.30  defined in section 57(a)(5) of the Internal Revenue Code, to the 
  7.31  extent not included under clause (ii), 
  7.32     (iv) depletion as defined in section 57(a)(1), determined 
  7.33  without regard to the last sentence of paragraph (1), of the 
  7.34  Internal Revenue Code, less 
  7.35     (v) the deductions provided in subdivision 2, paragraph 
  7.36  (a), clauses (1), (2), and (3) of the second series of clauses, 
  8.1   and 
  8.2      (vi) the exemption amount determined under subdivision 3. 
  8.3      In the case of an individual who is not a Minnesota 
  8.4   resident for the entire year, adjusted net minimum tax must be 
  8.5   multiplied by the fraction defined in section 290.06, 
  8.6   subdivision 2c, paragraph (e).  In the case of a trust or 
  8.7   estate, adjusted net minimum tax must be multiplied by the 
  8.8   fraction defined under subdivision 4, paragraph (b). 
  8.9      Sec. 8.  [GENERAL EDUCATION TAX RATE REDUCTION.] 
  8.10     The commissioner of the department of children, families, 
  8.11  and learning shall reduce the general education tax rate for 
  8.12  taxes payable in 1999 so that the amount raised by the general 
  8.13  education tax rate for taxes payable in 1999 is reduced by 
  8.14  $100,000,000 from the amount specified to be raised for taxes 
  8.15  payable in 1999 under section 124A.23.  The commissioner of the 
  8.16  department of children, families, and learning shall reduce the 
  8.17  general education tax rate for taxes payable in 2000 so that the 
  8.18  amount raised by the general education tax rate for taxes 
  8.19  payable in 2000 is reduced by $100,000,000 from the amount 
  8.20  specified to be raised for taxes payable in 2000 under Minnesota 
  8.21  Statutes, section 124A.23. 
  8.22     Sec. 9.  [PROPERTY TAX REBATE.] 
  8.23     (a) A credit is allowed against the tax imposed under 
  8.24  Minnesota Statutes, chapter 290, to an individual, other than as 
  8.25  a dependent, as defined in sections 151 and 152 of the Internal 
  8.26  Revenue Code, disregarding section 152(b)(3) of the Internal 
  8.27  Revenue Code, equal to 20 percent of the qualified property tax 
  8.28  paid before January 1, 1999, for taxes assessed in 1997. 
  8.29     (b) For property owned and occupied by the taxpayer during 
  8.30  1998, qualified property tax means property taxes payable as 
  8.31  defined in Minnesota Statutes, section 290A.03, subdivision 13, 
  8.32  and deductible by the individual under section 164 of the 
  8.33  Internal Revenue Code of 1986, assessed in 1997 and payable in 
  8.34  1998, except the requirement that the taxpayer own and occupy 
  8.35  the property on January 2, 1998, does not apply. 
  8.36     (c) For a renter, the qualified property tax means the 
  9.1   amount of rent constituting property taxes under Minnesota 
  9.2   Statutes, section 290A.03, subdivision 11, based on rent paid in 
  9.3   1998.  If two or more renters could be claimants under Minnesota 
  9.4   Statutes, chapter 290A, with regard to the rent constituting 
  9.5   property taxes, the rules under Minnesota Statutes, section 
  9.6   290A.03, subdivision 8, paragraph (f), apply to determine the 
  9.7   amount of the credit for the individual. 
  9.8      (d) For an individual who both owned and rented principal 
  9.9   residences in calendar year 1998, qualified taxes are the sum of 
  9.10  the amounts under paragraphs (b) and (c). 
  9.11     (e) If the amount of the credit under this section exceeds 
  9.12  the taxpayer's tax liability under chapter 290, the commissioner 
  9.13  shall refund the excess. 
  9.14     (f) To claim a credit under this section, the taxpayer must 
  9.15  attach a copy of the property tax statement and certificate of 
  9.16  rent paid, as applicable, and provide any additional information 
  9.17  the commissioner requires. 
  9.18     (g) This credit applies to taxable years beginning after 
  9.19  December 31, 1997, and before January 1, 1999. 
  9.20     (h) Payment of the credit under this section is subject to 
  9.21  Minnesota Statutes, chapter 270A, and any other provision 
  9.22  applicable to refunds under Minnesota Statutes, chapter 290. 
  9.23     (i) An amount sufficient to pay refunds under this section 
  9.24  is appropriated to the commissioner of revenue from the general 
  9.25  fund. 
  9.26     Sec. 10.  [FUNDS TRANSFER.] 
  9.27     Notwithstanding the provisions of section 16A.1521, 
  9.28  paragraph (b), the commissioner of finance shall transfer 
  9.29  $650,000,000 from the property tax reform account to the general 
  9.30  fund on July 1, 1998. 
  9.31     Sec. 11.  [EFFECTIVE DATE.] 
  9.32     Section 1 is effective for forecasts made in February 1998, 
  9.33  and thereafter.  Section 2 is effective February 1, 1998.  
  9.34  Sections 3 and 5 to 7 are effective for taxable years beginning 
  9.35  after December 31, 1997.