HF 2941

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; reducing the rates of individual 
  1.3             income tax; providing a subtraction for health 
  1.4             insurance premiums; changing the corporate franchise 
  1.5             tax apportionment formulas; amending Minnesota 
  1.6             Statutes 1999 Supplement, sections 290.01, subdivision 
  1.7             19b; 290.06, subdivisions 2c and 2d; 290.0675, 
  1.8             subdivisions 2 and 3; 290.091, subdivisions 1, 2, and 
  1.9             6; and 290.191, subdivisions 2 and 3. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1999 Supplement, section 
  1.12  290.01, subdivision 19b, is amended to read: 
  1.13     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  1.14  individuals, estates, and trusts, there shall be subtracted from 
  1.15  federal taxable income: 
  1.16     (1) interest income on obligations of any authority, 
  1.17  commission, or instrumentality of the United States to the 
  1.18  extent includable in taxable income for federal income tax 
  1.19  purposes but exempt from state income tax under the laws of the 
  1.20  United States; 
  1.21     (2) if included in federal taxable income, the amount of 
  1.22  any overpayment of income tax to Minnesota or to any other 
  1.23  state, for any previous taxable year, whether the amount is 
  1.24  received as a refund or as a credit to another taxable year's 
  1.25  income tax liability; 
  1.26     (3) the amount paid to others, less the credit allowed 
  1.27  under section 290.0674, not to exceed $1,625 for each qualifying 
  2.1   child in grades kindergarten to 6 and $2,500 for each qualifying 
  2.2   child in grades 7 to 12, for tuition, textbooks, and 
  2.3   transportation of each qualifying child in attending an 
  2.4   elementary or secondary school situated in Minnesota, North 
  2.5   Dakota, South Dakota, Iowa, or Wisconsin, wherein a resident of 
  2.6   this state may legally fulfill the state's compulsory attendance 
  2.7   laws, which is not operated for profit, and which adheres to the 
  2.8   provisions of the Civil Rights Act of 1964 and chapter 363.  For 
  2.9   the purposes of this clause, "tuition" includes fees or tuition 
  2.10  as defined in section 290.0674, subdivision 1, clause (1).  As 
  2.11  used in this clause, "textbooks" includes books and other 
  2.12  instructional materials and equipment used in elementary and 
  2.13  secondary schools in teaching only those subjects legally and 
  2.14  commonly taught in public elementary and secondary schools in 
  2.15  this state.  Equipment expenses qualifying for deduction 
  2.16  includes expenses as defined and limited in section 290.0674, 
  2.17  subdivision 1, clause (3).  "Textbooks" does not include 
  2.18  instructional books and materials used in the teaching of 
  2.19  religious tenets, doctrines, or worship, the purpose of which is 
  2.20  to instill such tenets, doctrines, or worship, nor does it 
  2.21  include books or materials for, or transportation to, 
  2.22  extracurricular activities including sporting events, musical or 
  2.23  dramatic events, speech activities, driver's education, or 
  2.24  similar programs.  For purposes of the subtraction provided by 
  2.25  this clause, "qualifying child" has the meaning given in section 
  2.26  32(c)(3) of the Internal Revenue Code; 
  2.27     (4) contributions made in taxable years beginning after 
  2.28  December 31, 1981, and before January 1, 1985, to a qualified 
  2.29  governmental pension plan, an individual retirement account, 
  2.30  simplified employee pension, or qualified plan covering a 
  2.31  self-employed person that were included in Minnesota gross 
  2.32  income in the taxable year for which the contributions were made 
  2.33  but were deducted or were not included in the computation of 
  2.34  federal adjusted gross income, less any amount allowed to be 
  2.35  subtracted as a distribution under this subdivision or a 
  2.36  predecessor provision in taxable years that began before January 
  3.1   1, 2000.  This subtraction applies only for taxable years 
  3.2   beginning after December 31, 1999, and before January 1, 2001; 
  3.3      (5) income as provided under section 290.0802; 
  3.4      (6) the amount of unrecovered accelerated cost recovery 
  3.5   system deductions allowed under subdivision 19g; 
  3.6      (7) to the extent included in federal adjusted gross 
  3.7   income, income realized on disposition of property exempt from 
  3.8   tax under section 290.491; 
  3.9      (8) to the extent not deducted in determining federal 
  3.10  taxable income or used to claim the long-term care insurance 
  3.11  credit under section 290.0672, the amount paid by individuals 
  3.12  for health insurance of self-employed individuals as determined 
  3.13  under section 162(l) of the Internal Revenue Code, except that 
  3.14  the percent limit does not apply as defined in section 213(d) of 
  3.15  the Internal Revenue Code.  If the taxpayer individual deducted 
  3.16  insurance payments under section 213 of the Internal Revenue 
  3.17  Code of 1986, the subtraction under this clause must be reduced 
  3.18  by the lesser of: 
  3.19     (i) the total itemized deductions allowed under section 
  3.20  63(d) of the Internal Revenue Code, less state, local, and 
  3.21  foreign income taxes deductible under section 164 of the 
  3.22  Internal Revenue Code and the standard deduction under section 
  3.23  63(c) of the Internal Revenue Code; or 
  3.24     (ii) the lesser of (A) the amount of insurance qualifying 
  3.25  as "medical care" under section 213(d) of the Internal Revenue 
  3.26  Code to the extent not deducted under section 162(1) of the 
  3.27  Internal Revenue Code or excluded from income or (B) the total 
  3.28  amount deductible for medical care under section 213(a); 
  3.29     (9) the exemption amount allowed under Laws 1995, chapter 
  3.30  255, article 3, section 2, subdivision 3; 
  3.31     (10) to the extent included in federal taxable income, 
  3.32  postservice benefits for youth community service under section 
  3.33  124D.42 for volunteer service under United States Code, title 
  3.34  42, section 5011(d), as amended; 
  3.35     (11) to the extent not deducted in determining federal 
  3.36  taxable income by an individual who does not itemize deductions 
  4.1   for federal income tax purposes for the taxable year, an amount 
  4.2   equal to 50 percent of the excess of charitable contributions 
  4.3   allowable as a deduction for the taxable year under section 
  4.4   170(a) of the Internal Revenue Code over $500; and 
  4.5      (12) to the extent included in federal taxable income, 
  4.6   holocaust victims' settlement payments for any injury incurred 
  4.7   as a result of the holocaust, if received by an individual who 
  4.8   was persecuted for racial or religious reasons by Nazi Germany 
  4.9   or any other Axis regime or an heir of such a person. 
  4.10     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  4.11  290.06, subdivision 2c, is amended to read: 
  4.12     Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  4.13  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  4.14  married individuals filing joint returns and surviving spouses 
  4.15  as defined in section 2(a) of the Internal Revenue Code must be 
  4.16  computed by applying to their taxable net income the following 
  4.17  schedule of rates: 
  4.18     (1) On the first $25,220 $25,680, 5.5 5 percent; 
  4.19     (2) On all over $25,220 $25,680, but not over 
  4.20  $100,200 $102,030, 7.25 6.5 percent; 
  4.21     (3) On all over $100,200 $102,030, 8 7.5 percent. 
  4.22     Married individuals filing separate returns, estates, and 
  4.23  trusts must compute their income tax by applying the above rates 
  4.24  to their taxable income, except that the income brackets will be 
  4.25  one-half of the above amounts.  
  4.26     (b) The income taxes imposed by this chapter upon unmarried 
  4.27  individuals must be computed by applying to taxable net income 
  4.28  the following schedule of rates: 
  4.29     (1) On the first $17,250 $17,570, 5.5 5 percent; 
  4.30     (2) On all over $17,250 $17,570, but not over 
  4.31  $56,680 $57,710, 7.25 6.5 percent; 
  4.32     (3) On all over $56,680 $57,710, 8 7.5 percent. 
  4.33     (c) The income taxes imposed by this chapter upon unmarried 
  4.34  individuals qualifying as a head of household as defined in 
  4.35  section 2(b) of the Internal Revenue Code must be computed by 
  4.36  applying to taxable net income the following schedule of rates: 
  5.1      (1) On the first $21,240 $21,630, 5.5 5 percent; 
  5.2      (2) On all over $21,240 $21,630, but not 
  5.3   over $85,350 $86,910, 7.25 6.5 percent; 
  5.4      (3) On all over $85,350 $86,910, 8 7.5 percent. 
  5.5      (d) In lieu of a tax computed according to the rates set 
  5.6   forth in this subdivision, the tax of any individual taxpayer 
  5.7   whose taxable net income for the taxable year is less than an 
  5.8   amount determined by the commissioner must be computed in 
  5.9   accordance with tables prepared and issued by the commissioner 
  5.10  of revenue based on income brackets of not more than $100.  The 
  5.11  amount of tax for each bracket shall be computed at the rates 
  5.12  set forth in this subdivision, provided that the commissioner 
  5.13  may disregard a fractional part of a dollar unless it amounts to 
  5.14  50 cents or more, in which case it may be increased to $1. 
  5.15     (e) An individual who is not a Minnesota resident for the 
  5.16  entire year must compute the individual's Minnesota income tax 
  5.17  as provided in this subdivision.  After the application of the 
  5.18  nonrefundable credits provided in this chapter, the tax 
  5.19  liability must then be multiplied by a fraction in which:  
  5.20     (1) the numerator is the individual's Minnesota source 
  5.21  federal adjusted gross income as defined in section 62 of the 
  5.22  Internal Revenue Code and increased by the additions required 
  5.23  under section 290.01, subdivision 19a, clauses (1) and (6), 
  5.24  after applying the allocation and assignability provisions of 
  5.25  section 290.081, clause (a), or 290.17; and 
  5.26     (2) the denominator is the individual's federal adjusted 
  5.27  gross income as defined in section 62 of the Internal Revenue 
  5.28  Code of 1986, increased by the amounts specified in section 
  5.29  290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
  5.30  amounts specified in section 290.01, subdivision 19b, clause (1).
  5.31     Sec. 3.  Minnesota Statutes 1999 Supplement, section 
  5.32  290.06, subdivision 2d, is amended to read: 
  5.33     Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  5.34  taxable years beginning after December 31, 1999 2000, the 
  5.35  minimum and maximum dollar amounts for each rate bracket for 
  5.36  which a tax is imposed in subdivision 2c shall be adjusted for 
  6.1   inflation by the percentage determined under paragraph (b).  For 
  6.2   the purpose of making the adjustment as provided in this 
  6.3   subdivision all of the rate brackets provided in subdivision 2c 
  6.4   shall be the rate brackets as they existed for taxable years 
  6.5   beginning after December 31, 1998 1999, and before January 
  6.6   1, 2000 2001.  The rate applicable to any rate bracket must not 
  6.7   be changed.  The dollar amounts setting forth the tax shall be 
  6.8   adjusted to reflect the changes in the rate brackets.  The rate 
  6.9   brackets as adjusted must be rounded to the nearest $10 amount.  
  6.10  If the rate bracket ends in $5, it must be rounded up to the 
  6.11  nearest $10 amount.  
  6.12     (b) The commissioner shall adjust the rate brackets and by 
  6.13  the percentage determined pursuant to the provisions of section 
  6.14  1(f) of the Internal Revenue Code, except that in section 
  6.15  1(f)(3)(B) the word "1998" shall be substituted for the word 
  6.16  "1992."  For 2000 2001, the commissioner shall then determine 
  6.17  the percent change from the 12 months ending on August 31, 1998 
  6.18  1999, to the 12 months ending on August 31, 1999 2000, and in 
  6.19  each subsequent year, from the 12 months ending on August 
  6.20  31, 1998 1999, to the 12 months ending on August 31 of the year 
  6.21  preceding the taxable year.  The determination of the 
  6.22  commissioner pursuant to this subdivision shall not be 
  6.23  considered a "rule" and shall not be subject to the 
  6.24  Administrative Procedure Act contained in chapter 14.  
  6.25     No later than December 15 of each year, the commissioner 
  6.26  shall announce the specific percentage that will be used to 
  6.27  adjust the tax rate brackets. 
  6.28     Sec. 4.  Minnesota Statutes 1999 Supplement, section 
  6.29  290.0675, subdivision 2, is amended to read: 
  6.30     Subd. 2.  [CREDIT ALLOWED.] A married couple filing a joint 
  6.31  return is allowed a credit against the tax imposed under section 
  6.32  290.06.  
  6.33     The minimum taxable income for the married couple to be 
  6.34  eligible for the credit is $25,000 $25,680, and the minimum 
  6.35  earned income in order for the couple to be eligible for the 
  6.36  credit is $14,000 $14,250 for each spouse. 
  7.1      Sec. 5.  Minnesota Statutes 1999 Supplement, section 
  7.2   290.0675, subdivision 3, is amended to read: 
  7.3      Subd. 3.  [CREDIT AMOUNT.] The credit amount is as shown in 
  7.4   the table in this subdivision, based on the couple's taxable 
  7.5   income for the tax year and on the earned income of the 
  7.6   lesser-earning spouse. 
  7.7                                Credit For          Credit For
  7.8     Earned Income of           Taxable Income      Taxable Income
  7.9     Lesser Earning Spouse      $25,000-$99,999     $100,000-over
  7.10    $14,000 - $14,999          $9                  $0    
  7.11    $15,000 - $15,999          $27                 $0    
  7.12    $16,000 - $16,999          $44                 $0    
  7.13    $17,000 - $17,999          $62                 $0    
  7.14    $18,000 - $18,999          $79                 $0    
  7.15    $19,000 - $19,999          $97                 $0  
  7.16    $20,000 - $20,999          $114                $0  
  7.17    $21,000 - $21,999          $132                $0 
  7.18    $22,000 - $22,999          $149                $0
  7.19    $23,000 - $23,999          $162                $0 
  7.20    $24,000 - $24,999          $162                $0   
  7.21    $25,000 - $25,999          $162                $0  
  7.22    $26,000 - $26,999          $162                $0   
  7.23    $27,000 - $27,999          $162                $0
  7.24    $28,000 - $28,999          $162                $9
  7.25    $29,000 - $29,999          $162                $16
  7.26    $30,000 - $30,999          $162                $24
  7.27    $31,000 - $31,999          $162                $31
  7.28    $32,000 - $32,999          $162                $39
  7.29    $33,000 - $33,999          $162                $46
  7.30    $34,000 - $34,999          $162                $54
  7.31    $35,000 - $35,999          $162                $61
  7.32    $36,000 - $36,999          $162                $69
  7.33    $37,000 - $37,999          $162                $76
  7.34    $38,000 - $38,999          $162                $84
  7.35    $39,000 - $39,999          $162                $91
  7.36    $40,000 - $40,999          $162                $99
  8.1     $41,000 - $41,999          $162                $106
  8.2     $42,000 - $42,999          $162                $114
  8.3     $43,000 - $43,999          $162                $121
  8.4     $44,000 - $44,999          $162                $129
  8.5     $45,000 - $45,999          $162                $136
  8.6     $46,000 - $46,999          $162                $144
  8.7     $47,000 - $47,999          $162                $151
  8.8     $48,000 - $48,999          $162                $159
  8.9     $49,000 - $49,999          $162                $166
  8.10    $50,000 - $50,999          $162                $174
  8.11    $51,000 - $51,999          $162                $181
  8.12    $52,000 - $52,999          $162                $189
  8.13    $53,000 - $53,999          $162                $196
  8.14    $54,000 - $54,999          $162                $204
  8.15    $55,000 - $55,999          $162                $211
  8.16    $56,000 - $56,999          $162                $219
  8.17    $57,000 - $57,999          $162                $226
  8.18    $58,000 - $58,999          $162                $234
  8.19    $59,000 - $59,999          $162                $241
  8.20    $60,000 - $60,999          $162                $249
  8.21    $61,000 - $61,999          $162                $256
  8.22    $62,000 and over           $162                $261
  8.23                               Credit For          Credit For
  8.24    Earned Income of           Taxable Income      Taxable Income
  8.25    Lesser Earning Spouse      $25,680-$102,029    $102,030-over
  8.26    $14,250 - $15,249          $6                  $0    
  8.27    $15,250 - $16,249          $21                 $0    
  8.28    $16,250 - $17,249          $36                 $0    
  8.29    $17,250 - $18,249          $51                 $0    
  8.30    $18,250 - $19,249          $66                 $0    
  8.31    $19,250 - $20,249          $81                 $0  
  8.32    $20,250 - $21,249          $96                 $0  
  8.33    $21,250 - $22,249          $111                $0 
  8.34    $22,250 - $23,249          $126                $0
  8.35    $23,250 - $24,249          $141                $0 
  8.36    $24,250 - $25,249          $141                $0   
  9.1     $25,250 - $26,249          $141                $0  
  9.2     $26,250 - $27,249          $141                $0   
  9.3     $27,250 - $28,249          $141                $0
  9.4     $28,250 - $29,249          $141                $0
  9.5     $29,250 - $30,249          $141                $0
  9.6     $30,250 - $31,249          $141                $0
  9.7     $31,250 - $32,249          $141                $0
  9.8     $32,250 - $33,249          $141                $0
  9.9     $33,250 - $34,249          $141                $0
  9.10    $34,250 - $35,249          $141                $0
  9.11    $35,250 - $36,249          $141                $0
  9.12    $36,250 - $37,249          $141                $4
  9.13    $37,250 - $38,249          $141                $14
  9.14    $38,250 - $39,249          $141                $24
  9.15    $39,250 - $40,249          $141                $34
  9.16    $40,250 - $41,249          $141                $44
  9.17    $41,250 - $42,249          $141                $54
  9.18    $42,250 - $43,249          $141                $64
  9.19    $43,250 - $44,249          $141                $74
  9.20    $44,250 - $45,249          $141                $84
  9.21    $45,250 - $46,249          $141                $94
  9.22    $46,250 - $47,249          $141                $104
  9.23    $47,250 - $48,249          $141                $114
  9.24    $48,250 - $49,249          $141                $124
  9.25    $49,250 - $50,249          $141                $134
  9.26    $50,250 - $51,249          $141                $144
  9.27    $51,250 - $52,249          $141                $154
  9.28    $52,250 - $53,249          $141                $164
  9.29    $53,250 - $54,249          $141                $174
  9.30    $54,250 - $55,249          $141                $184
  9.31    $55,250 - $56,249          $141                $194
  9.32    $56,250 - $57,249          $141                $204
  9.33    $57,250 - $58,249          $141                $214
  9.34    $58,250 - $59,249          $141                $224
  9.35    $59,250 - $60,249          $141                $234
  9.36    $60,250 - $61,249          $141                $244
 10.1     $61,250 - $62,249          $141                $254
 10.2     $62,250 - $63,249          $141                $264
 10.3     $63,250 - $64,249          $141                $274
 10.4     $64,250 and over           $141                $276
 10.5      For taxable years beginning after December 31, 2000, the 
 10.6   commissioner shall update the table as necessary to provide a 
 10.7   credit that reflects the relationship between the marginal tax 
 10.8   rates imposed under section 290.06, subdivision 2c. 
 10.9      Sec. 6.  Minnesota Statutes 1999 Supplement, section 
 10.10  290.091, subdivision 1, is amended to read: 
 10.11     Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
 10.12  other taxes imposed by this chapter a tax is imposed on 
 10.13  individuals, estates, and trusts equal to the excess (if any) of 
 10.14     (a) an amount equal to 6.5 5.9 percent of alternative 
 10.15  minimum taxable income after subtracting the exemption amount, 
 10.16  over 
 10.17     (b) the regular tax for the taxable year. 
 10.18     Sec. 7.  Minnesota Statutes 1999 Supplement, section 
 10.19  290.091, subdivision 2, is amended to read: 
 10.20     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
 10.21  this section, the following terms have the meanings given: 
 10.22     (a) "Alternative minimum taxable income" means the sum of 
 10.23  the following for the taxable year: 
 10.24     (1) the taxpayer's federal alternative minimum taxable 
 10.25  income as defined in section 55(b)(2) of the Internal Revenue 
 10.26  Code; 
 10.27     (2) the taxpayer's itemized deductions allowed in computing 
 10.28  federal alternative minimum taxable income, but excluding: 
 10.29     (i) the Minnesota charitable contribution deduction; 
 10.30     (ii) the medical expense deduction; 
 10.31     (iii) the casualty, theft, and disaster loss deduction; 
 10.32     (iv) the impairment-related work expenses of a disabled 
 10.33  person; and 
 10.34     (v) holocaust victims' settlement payments to the extent 
 10.35  allowed under section 290.01, subdivision 19b; 
 10.36     (3) for depletion allowances computed under section 613A(c) 
 11.1   of the Internal Revenue Code, with respect to each property (as 
 11.2   defined in section 614 of the Internal Revenue Code), to the 
 11.3   extent not included in federal alternative minimum taxable 
 11.4   income, the excess of the deduction for depletion allowable 
 11.5   under section 611 of the Internal Revenue Code for the taxable 
 11.6   year over the adjusted basis of the property at the end of the 
 11.7   taxable year (determined without regard to the depletion 
 11.8   deduction for the taxable year); 
 11.9      (4) to the extent not included in federal alternative 
 11.10  minimum taxable income, the amount of the tax preference for 
 11.11  intangible drilling cost under section 57(a)(2) of the Internal 
 11.12  Revenue Code determined without regard to subparagraph (E); and 
 11.13     (5) to the extent not included in federal alternative 
 11.14  minimum taxable income, the amount of interest income as 
 11.15  provided by section 290.01, subdivision 19a, clause (1); 
 11.16     less the sum of the amounts determined under the following: 
 11.17     (1) interest income as defined in section 290.01, 
 11.18  subdivision 19b, clause (1); 
 11.19     (2) an overpayment of state income tax as provided by 
 11.20  section 290.01, subdivision 19b, clause (2), to the extent 
 11.21  included in federal alternative minimum taxable income; and 
 11.22     (3) the amount of investment interest paid or accrued 
 11.23  within the taxable year on indebtedness to the extent that the 
 11.24  amount does not exceed net investment income, as defined in 
 11.25  section 163(d)(4) of the Internal Revenue Code.  Interest does 
 11.26  not include amounts deducted in computing federal adjusted gross 
 11.27  income. 
 11.28     In the case of an estate or trust, alternative minimum 
 11.29  taxable income must be computed as provided in section 59(c) of 
 11.30  the Internal Revenue Code. 
 11.31     (b) "Investment interest" means investment interest as 
 11.32  defined in section 163(d)(3) of the Internal Revenue Code. 
 11.33     (c) "Tentative minimum tax" equals 6.5 5.9 percent of 
 11.34  alternative minimum taxable income after subtracting the 
 11.35  exemption amount determined under subdivision 3. 
 11.36     (d) "Regular tax" means the tax that would be imposed under 
 12.1   this chapter (without regard to this section and section 
 12.2   290.032), reduced by the sum of the nonrefundable credits 
 12.3   allowed under this chapter.  
 12.4      (e) "Net minimum tax" means the minimum tax imposed by this 
 12.5   section. 
 12.6      (f) "Minnesota charitable contribution deduction" means a 
 12.7   charitable contribution deduction under section 170 of the 
 12.8   Internal Revenue Code to or for the use of an entity described 
 12.9   in section 290.21, subdivision 3, clauses (a) to (e).  When the 
 12.10  federal deduction for charitable contributions is limited under 
 12.11  section 170(b) of the Internal Revenue Code, the allowable 
 12.12  contributions in the year of contribution are deemed to be first 
 12.13  contributions to entities described in section 290.21, 
 12.14  subdivision 3, clauses (a) to (e). 
 12.15     Sec. 8.  Minnesota Statutes 1999 Supplement, section 
 12.16  290.091, subdivision 6, is amended to read: 
 12.17     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
 12.18  is allowed against the tax imposed by this chapter on 
 12.19  individuals, trusts, and estates equal to the minimum tax credit 
 12.20  for the taxable year.  The minimum tax credit equals the 
 12.21  adjusted net minimum tax for taxable years beginning after 
 12.22  December 31, 1988, reduced by the minimum tax credits allowed in 
 12.23  a prior taxable year.  The credit may not exceed the excess (if 
 12.24  any) for the taxable year of 
 12.25     (1) the regular tax, over 
 12.26     (2) the greater of (i) the tentative alternative minimum 
 12.27  tax, or (ii) zero. 
 12.28     (b) The adjusted net minimum tax for a taxable year equals 
 12.29  the lesser of the net minimum tax or the excess (if any) of 
 12.30     (1) the tentative minimum tax, over 
 12.31     (2) 6.5 5.9 percent of the sum of 
 12.32     (i) adjusted gross income as defined in section 62 of the 
 12.33  Internal Revenue Code, 
 12.34     (ii) interest income as defined in section 290.01, 
 12.35  subdivision 19a, clause (1), 
 12.36     (iii) interest on specified private activity bonds, as 
 13.1   defined in section 57(a)(5) of the Internal Revenue Code, to the 
 13.2   extent not included under clause (ii), 
 13.3      (iv) depletion as defined in section 57(a)(1), determined 
 13.4   without regard to the last sentence of paragraph (1), of the 
 13.5   Internal Revenue Code, less 
 13.6      (v) the deductions allowed in computing alternative minimum 
 13.7   taxable income provided in subdivision 2, paragraph (a), clause 
 13.8   (2) of the first series of clauses and clauses (1), (2), and (3) 
 13.9   of the second series of clauses, and 
 13.10     (vi) the exemption amount determined under subdivision 3. 
 13.11     In the case of an individual who is not a Minnesota 
 13.12  resident for the entire year, adjusted net minimum tax must be 
 13.13  multiplied by the fraction defined in section 290.06, 
 13.14  subdivision 2c, paragraph (e).  In the case of a trust or 
 13.15  estate, adjusted net minimum tax must be multiplied by the 
 13.16  fraction defined under subdivision 4, paragraph (b). 
 13.17     Sec. 9.  Minnesota Statutes 1999 Supplement, section 
 13.18  290.191, subdivision 2, is amended to read: 
 13.19     Subd. 2.  [APPORTIONMENT FORMULA OF GENERAL APPLICATION.] 
 13.20  Except for those trades or businesses required to use a 
 13.21  different formula under subdivision 3 or section 290.35 or 
 13.22  290.36, and for those trades or businesses that receive 
 13.23  permission to use some other method under section 290.20 or 
 13.24  under subdivision 4, a trade or business required to apportion 
 13.25  its net income must apportion its income to this state on the 
 13.26  basis of the percentage obtained by taking the sum of:  
 13.27     (1) 75 85 percent of the percentage which the sales made 
 13.28  within this state in connection with the trade or business 
 13.29  during the tax period are of the total sales wherever made in 
 13.30  connection with the trade or business during the tax period; 
 13.31     (2) 12.5 7.5 percent of the percentage which the total 
 13.32  tangible property used by the taxpayer in this state in 
 13.33  connection with the trade or business during the tax period is 
 13.34  of the total tangible property, wherever located, used by the 
 13.35  taxpayer in connection with the trade or business during the tax 
 13.36  period; and 
 14.1      (3) 12.5 7.5 percent of the percentage which the taxpayer's 
 14.2   total payrolls paid or incurred in this state or paid in respect 
 14.3   to labor performed in this state in connection with the trade or 
 14.4   business during the tax period are of the taxpayer's total 
 14.5   payrolls paid or incurred in connection with the trade or 
 14.6   business during the tax period.  
 14.7      Sec. 10.  Minnesota Statutes 1999 Supplement, section 
 14.8   290.191, subdivision 3, is amended to read: 
 14.9      Subd. 3.  [APPORTIONMENT FORMULA FOR FINANCIAL 
 14.10  INSTITUTIONS.] Except for an investment company required to 
 14.11  apportion its income under section 290.36, a financial 
 14.12  institution that is required to apportion its net income must 
 14.13  apportion its net income to this state on the basis of the 
 14.14  percentage obtained by taking the sum of:  
 14.15     (1) 75 85 percent of the percentage which the receipts from 
 14.16  within this state in connection with the trade or business 
 14.17  during the tax period are of the total receipts in connection 
 14.18  with the trade or business during the tax period, from wherever 
 14.19  derived; 
 14.20     (2) 12.5 7.5 percent of the percentage which the sum of the 
 14.21  total tangible property used by the taxpayer in this state and 
 14.22  the intangible property owned by the taxpayer and attributed to 
 14.23  this state in connection with the trade or business during the 
 14.24  tax period is of the sum of the total tangible property, 
 14.25  wherever located, used by the taxpayer and the intangible 
 14.26  property owned by the taxpayer and attributed to all states in 
 14.27  connection with the trade or business during the tax period; and 
 14.28     (3) 12.5 7.5 percent of the percentage which the taxpayer's 
 14.29  total payrolls paid or incurred in this state or paid in respect 
 14.30  to labor performed in this state in connection with the trade or 
 14.31  business during the tax period are of the taxpayer's total 
 14.32  payrolls paid or incurred in connection with the trade or 
 14.33  business during the tax period. 
 14.34     Sec. 11.  [EFFECTIVE DATE.] 
 14.35     Section 1 is effective for taxable years beginning after 
 14.36  December 31, 2000. 
 15.1      Sections 2 to 10 are effective for taxable years beginning 
 15.2   after December 31, 1999.  This supersedes Laws 1999, chapter 
 15.3   243, article 2, sections 24, 25, and 32, paragraph (g).