SF 36

as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to taxation; reducing individual income tax 
  1.3             rates; amending Minnesota Statutes 2000, sections 
  1.4             290.06, subdivisions 2c and 2d; 290.091, subdivisions 
  1.5             1, 2, and 6; and 469.1734, subdivision 4. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2000, section 290.06, 
  1.8   subdivision 2c, is amended to read: 
  1.9      Subd. 2c.  [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES, 
  1.10  AND TRUSTS.] (a) The income taxes imposed by this chapter upon 
  1.11  married individuals filing joint returns and surviving spouses 
  1.12  as defined in section 2(a) of the Internal Revenue Code must be 
  1.13  computed by applying to their taxable net income the following 
  1.14  schedule of rates: 
  1.15     (1) On the first $25,680, 5.35 $26,480, 4.85 percent; 
  1.16     (2) On all over $25,680 $26,480, but not over $102,030, 
  1.17  7.05 $105,200, 6.55 percent; 
  1.18     (3) On all over $102,030, 7.85 $105,200, 7.35 percent. 
  1.19     Married individuals filing separate returns, estates, and 
  1.20  trusts must compute their income tax by applying the above rates 
  1.21  to their taxable income, except that the income brackets will be 
  1.22  one-half of the above amounts.  
  1.23     (b) The income taxes imposed by this chapter upon unmarried 
  1.24  individuals must be computed by applying to taxable net income 
  1.25  the following schedule of rates: 
  2.1      (1) On the first $17,570, 5.35 $18,120, 4.85 percent; 
  2.2      (2) On all over $17,570 $18,120, but not over $57,710, 
  2.3   7.05 $59,500, 6.55 percent; 
  2.4      (3) On all over $57,710, 7.85 $59,500, 7.35 percent. 
  2.5      (c) The income taxes imposed by this chapter upon unmarried 
  2.6   individuals qualifying as a head of household as defined in 
  2.7   section 2(b) of the Internal Revenue Code must be computed by 
  2.8   applying to taxable net income the following schedule of rates: 
  2.9      (1) On the first $21,630, 5.35 $22,300, 4.85 percent; 
  2.10     (2) On all over $21,630 $22,300, but not over $86,910, 
  2.11  7.05 $89,610, 6.55 percent; 
  2.12     (3) On all over $86,910, 7.85 $89,610, 7.35 percent. 
  2.13     (d) In lieu of a tax computed according to the rates set 
  2.14  forth in this subdivision, the tax of any individual taxpayer 
  2.15  whose taxable net income for the taxable year is less than an 
  2.16  amount determined by the commissioner must be computed in 
  2.17  accordance with tables prepared and issued by the commissioner 
  2.18  of revenue based on income brackets of not more than $100.  The 
  2.19  amount of tax for each bracket shall be computed at the rates 
  2.20  set forth in this subdivision, provided that the commissioner 
  2.21  may disregard a fractional part of a dollar unless it amounts to 
  2.22  50 cents or more, in which case it may be increased to $1. 
  2.23     (e) An individual who is not a Minnesota resident for the 
  2.24  entire year must compute the individual's Minnesota income tax 
  2.25  as provided in this subdivision.  After the application of the 
  2.26  nonrefundable credits provided in this chapter, the tax 
  2.27  liability must then be multiplied by a fraction in which:  
  2.28     (1) the numerator is the individual's Minnesota source 
  2.29  federal adjusted gross income as defined in section 62 of the 
  2.30  Internal Revenue Code and increased by the additions required 
  2.31  under section 290.01, subdivision 19a, clauses (1) and (6), 
  2.32  after applying the allocation and assignability provisions of 
  2.33  section 290.081, clause (a), or 290.17; and 
  2.34     (2) the denominator is the individual's federal adjusted 
  2.35  gross income as defined in section 62 of the Internal Revenue 
  2.36  Code of 1986, increased by the amounts specified in section 
  3.1   290.01, subdivision 19a, clauses (1) and (6), and reduced by the 
  3.2   amounts specified in section 290.01, subdivision 19b, clause (1).
  3.3      [EFFECTIVE DATE.] This section is effective for taxable 
  3.4   years beginning after December 31, 2000. 
  3.5      Sec. 2.  Minnesota Statutes 2000, section 290.06, 
  3.6   subdivision 2d, is amended to read: 
  3.7      Subd. 2d.  [INFLATION ADJUSTMENT OF BRACKETS.] (a) For 
  3.8   taxable years beginning after December 31, 2000 2001, the 
  3.9   minimum and maximum dollar amounts for each rate bracket for 
  3.10  which a tax is imposed in subdivision 2c shall be adjusted for 
  3.11  inflation by the percentage determined under paragraph (b).  For 
  3.12  the purpose of making the adjustment as provided in this 
  3.13  subdivision all of the rate brackets provided in subdivision 2c 
  3.14  shall be the rate brackets as they existed for taxable years 
  3.15  beginning after December 31, 1999 2000, and before January 
  3.16  1, 2001 2002.  The rate applicable to any rate bracket must not 
  3.17  be changed.  The dollar amounts setting forth the tax shall be 
  3.18  adjusted to reflect the changes in the rate brackets.  The rate 
  3.19  brackets as adjusted must be rounded to the nearest $10 amount.  
  3.20  If the rate bracket ends in $5, it must be rounded up to the 
  3.21  nearest $10 amount.  
  3.22     (b) The commissioner shall adjust the rate brackets and by 
  3.23  the percentage determined pursuant to the provisions of section 
  3.24  1(f) of the Internal Revenue Code, except that in section 
  3.25  1(f)(3)(B) the word "1999" "2000" shall be substituted for the 
  3.26  word "1992."  For 2001 2002, the commissioner shall then 
  3.27  determine the percent change from the 12 months ending on August 
  3.28  31, 1999 2000, to the 12 months ending on August 31, 2000 2001, 
  3.29  and in each subsequent year, from the 12 months ending on August 
  3.30  31, 1999 2000, to the 12 months ending on August 31 of the year 
  3.31  preceding the taxable year.  The determination of the 
  3.32  commissioner pursuant to this subdivision shall not be 
  3.33  considered a "rule" and shall not be subject to the 
  3.34  Administrative Procedure Act contained in chapter 14.  
  3.35     No later than December 15 of each year, the commissioner 
  3.36  shall announce the specific percentage that will be used to 
  4.1   adjust the tax rate brackets. 
  4.2      [EFFECTIVE DATE.] This section is effective for taxable 
  4.3   years beginning after December 31, 2000. 
  4.4      Sec. 3.  Minnesota Statutes 2000, section 290.091, 
  4.5   subdivision 1, is amended to read: 
  4.6      Subdivision 1.  [IMPOSITION OF TAX.] In addition to all 
  4.7   other taxes imposed by this chapter a tax is imposed on 
  4.8   individuals, estates, and trusts equal to the excess (if any) of 
  4.9      (a) an amount equal to 6.4 5.9 percent of alternative 
  4.10  minimum taxable income after subtracting the exemption amount, 
  4.11  over 
  4.12     (b) the regular tax for the taxable year. 
  4.13     [EFFECTIVE DATE.] This section is effective for taxable 
  4.14  years beginning after December 31, 2000. 
  4.15     Sec. 4.  Minnesota Statutes 2000, section 290.091, 
  4.16  subdivision 2, is amended to read: 
  4.17     Subd. 2.  [DEFINITIONS.] For purposes of the tax imposed by 
  4.18  this section, the following terms have the meanings given: 
  4.19     (a) "Alternative minimum taxable income" means the sum of 
  4.20  the following for the taxable year: 
  4.21     (1) the taxpayer's federal alternative minimum taxable 
  4.22  income as defined in section 55(b)(2) of the Internal Revenue 
  4.23  Code; 
  4.24     (2) the taxpayer's itemized deductions allowed in computing 
  4.25  federal alternative minimum taxable income, but excluding: 
  4.26     (i) the Minnesota charitable contribution deduction; 
  4.27     (ii) the medical expense deduction; 
  4.28     (iii) the casualty, theft, and disaster loss deduction; 
  4.29     (iv) the impairment-related work expenses of a disabled 
  4.30  person; and 
  4.31     (v) holocaust victims' settlement payments to the extent 
  4.32  allowed under section 290.01, subdivision 19b; 
  4.33     (3) for depletion allowances computed under section 613A(c) 
  4.34  of the Internal Revenue Code, with respect to each property (as 
  4.35  defined in section 614 of the Internal Revenue Code), to the 
  4.36  extent not included in federal alternative minimum taxable 
  5.1   income, the excess of the deduction for depletion allowable 
  5.2   under section 611 of the Internal Revenue Code for the taxable 
  5.3   year over the adjusted basis of the property at the end of the 
  5.4   taxable year (determined without regard to the depletion 
  5.5   deduction for the taxable year); 
  5.6      (4) to the extent not included in federal alternative 
  5.7   minimum taxable income, the amount of the tax preference for 
  5.8   intangible drilling cost under section 57(a)(2) of the Internal 
  5.9   Revenue Code determined without regard to subparagraph (E); and 
  5.10     (5) to the extent not included in federal alternative 
  5.11  minimum taxable income, the amount of interest income as 
  5.12  provided by section 290.01, subdivision 19a, clause (1); 
  5.13     less the sum of the amounts determined under the following: 
  5.14     (1) interest income as defined in section 290.01, 
  5.15  subdivision 19b, clause (1); 
  5.16     (2) an overpayment of state income tax as provided by 
  5.17  section 290.01, subdivision 19b, clause (2), to the extent 
  5.18  included in federal alternative minimum taxable income; 
  5.19     (3) the amount of investment interest paid or accrued 
  5.20  within the taxable year on indebtedness to the extent that the 
  5.21  amount does not exceed net investment income, as defined in 
  5.22  section 163(d)(4) of the Internal Revenue Code.  Interest does 
  5.23  not include amounts deducted in computing federal adjusted gross 
  5.24  income; and 
  5.25     (4) amounts subtracted from federal taxable income as 
  5.26  provided by section 290.01, subdivision 19b, clauses (4) and (6).
  5.27     In the case of an estate or trust, alternative minimum 
  5.28  taxable income must be computed as provided in section 59(c) of 
  5.29  the Internal Revenue Code. 
  5.30     (b) "Investment interest" means investment interest as 
  5.31  defined in section 163(d)(3) of the Internal Revenue Code. 
  5.32     (c) "Tentative minimum tax" equals 6.4 5.9 percent of 
  5.33  alternative minimum taxable income after subtracting the 
  5.34  exemption amount determined under subdivision 3. 
  5.35     (d) "Regular tax" means the tax that would be imposed under 
  5.36  this chapter (without regard to this section and section 
  6.1   290.032), reduced by the sum of the nonrefundable credits 
  6.2   allowed under this chapter.  
  6.3      (e) "Net minimum tax" means the minimum tax imposed by this 
  6.4   section. 
  6.5      (f) "Minnesota charitable contribution deduction" means a 
  6.6   charitable contribution deduction under section 170 of the 
  6.7   Internal Revenue Code to or for the use of an entity described 
  6.8   in section 290.21, subdivision 3, clauses (a) to (e).  When the 
  6.9   federal deduction for charitable contributions is limited under 
  6.10  section 170(b) of the Internal Revenue Code, the allowable 
  6.11  contributions in the year of contribution are deemed to be first 
  6.12  contributions to entities described in section 290.21, 
  6.13  subdivision 3, clauses (a) to (e). 
  6.14     [EFFECTIVE DATE.] This section is effective for taxable 
  6.15  years beginning after December 31, 2000. 
  6.16     Sec. 5.  Minnesota Statutes 2000, section 290.091, 
  6.17  subdivision 6, is amended to read: 
  6.18     Subd. 6.  [CREDIT FOR PRIOR YEARS' LIABILITY.] (a) A credit 
  6.19  is allowed against the tax imposed by this chapter on 
  6.20  individuals, trusts, and estates equal to the minimum tax credit 
  6.21  for the taxable year.  The minimum tax credit equals the 
  6.22  adjusted net minimum tax for taxable years beginning after 
  6.23  December 31, 1988, reduced by the minimum tax credits allowed in 
  6.24  a prior taxable year.  The credit may not exceed the excess (if 
  6.25  any) for the taxable year of 
  6.26     (1) the regular tax, over 
  6.27     (2) the greater of (i) the tentative alternative minimum 
  6.28  tax, or (ii) zero. 
  6.29     (b) The adjusted net minimum tax for a taxable year equals 
  6.30  the lesser of the net minimum tax or the excess (if any) of 
  6.31     (1) the tentative minimum tax, over 
  6.32     (2) 6.4 5.9 percent of the sum of 
  6.33     (i) adjusted gross income as defined in section 62 of the 
  6.34  Internal Revenue Code, 
  6.35     (ii) interest income as defined in section 290.01, 
  6.36  subdivision 19a, clause (1), 
  7.1      (iii) interest on specified private activity bonds, as 
  7.2   defined in section 57(a)(5) of the Internal Revenue Code, to the 
  7.3   extent not included under clause (ii), 
  7.4      (iv) depletion as defined in section 57(a)(1), determined 
  7.5   without regard to the last sentence of paragraph (1), of the 
  7.6   Internal Revenue Code, less 
  7.7      (v) the deductions allowed in computing alternative minimum 
  7.8   taxable income provided in subdivision 2, paragraph (a), clause 
  7.9   (2) of the first series of clauses and clauses (1), (2), and (3) 
  7.10  of the second series of clauses, and 
  7.11     (vi) the exemption amount determined under subdivision 3. 
  7.12     In the case of an individual who is not a Minnesota 
  7.13  resident for the entire year, adjusted net minimum tax must be 
  7.14  multiplied by the fraction defined in section 290.06, 
  7.15  subdivision 2c, paragraph (e).  In the case of a trust or 
  7.16  estate, adjusted net minimum tax must be multiplied by the 
  7.17  fraction defined under subdivision 4, paragraph (b). 
  7.18     [EFFECTIVE DATE.] This section is effective for taxable 
  7.19  years beginning after December 31, 2000. 
  7.20     Sec. 6.  Minnesota Statutes 2000, section 469.1734, 
  7.21  subdivision 4, is amended to read: 
  7.22     Subd. 4.  [INCOME TAX.] (a) Upon application by the 
  7.23  qualifying business to the city, and approval of the city, a 
  7.24  qualifying business shall receive a credit against taxes imposed 
  7.25  under chapter 290, other than the tax imposed under section 
  7.26  290.92, based on the taxable net income of the qualified 
  7.27  business attributable to the border city, but outside the border 
  7.28  city development zone, multiplied by 9.8 percent in the case of 
  7.29  a taxpayer under section 290.02, and 7.85 7.35 percent in the 
  7.30  case of a taxpayer taxable under section 290.06, subdivision 
  7.31  2c.  The attributable net income of a qualified business in the 
  7.32  border city is determined by multiplying the taxable net income 
  7.33  of the business entity, determined as if the business were a C 
  7.34  corporation, by a fraction: 
  7.35     (1) the numerator of which is: 
  7.36     (i) the ratio of the taxpayer's property factor under 
  8.1   section 290.191 located in the border city, but outside of the 
  8.2   border city development zone, for the taxable year over the 
  8.3   property factor numerator determined under section 290.191, plus 
  8.4      (ii) the ratio of the taxpayer's payroll factor under 
  8.5   section 290.191 located in the border city, but outside of the 
  8.6   border city development zone, for the taxable year over the 
  8.7   payroll factor numerator determined under section 290.191; and 
  8.8      (2) the denominator of which is two. 
  8.9      (b) The credit under this subdivision applies after any 
  8.10  credit allowed under subdivision 5. 
  8.11     (c) After any notice period required by subdivision 7, the 
  8.12  city council must determine whether granting the credit is in 
  8.13  the best interest of the city, and if it so determines, must 
  8.14  approve the granting of the credit and determine its amount. 
  8.15     (d) The credit under this subdivision may not exceed the 
  8.16  amount of the tax credit certificates received by the taxpayer 
  8.17  from the city, less any tax credit certificates used under 
  8.18  section 469.1732, subdivision 2, and subdivisions 5 and 6. 
  8.19     (e) No taxpayer may receive the credit under this 
  8.20  subdivision for more than five taxable years. 
  8.21     [EFFECTIVE DATE.] This section is effective for taxable 
  8.22  years beginning after December 31, 2000.