Exempting Social Security income
Minnesota is one of thirteen states that continues to impose tax on Social Security income. Beginning in 2017, however–with considerable bipartisan support– Minnesota enacted senior tax relief with a Social Security “subtraction” (the process of taking a quantity away from another under specific rules to obtain the difference) that departed from federal tax treatment of these benefits.
According to Sean Williams, Minnesota House Research Department, “About 290,000 taxpayers benefited from the subtraction in tax year 2017, resulting in a revenue decrease of about $58.3 million. The average tax savings from the subtraction was about $201.” The subtraction was subsequently increased in the 2019 session.
Mark Haveman, Executive Director for the Minnesota Center for Fiscal Excellence, conjectures in a recent article, “Fire up the Seniors: The Push to Exempt Social Security,” “For republican lawmakers these back-to-back legislative accomplishments have not ‘addressed the concern’ but rather ‘stoked the fires’ to have Minnesota go even further and join the 37 – and soon to be 38 – other states (seven of which do not have state income taxes) in totally exempting Social Security income. In interviews previewing the 2020 legislative session, Senate Majority Leader Gazelka has said this is the centerpiece of GOP’s tax policy to do list.”
Those supporting the proposed legislation contend:
Since individuals have already paid social security taxes all through their working careers, taxing it again at retirement amounts to double taxation. (Can’t argue with that.)
Seniors on fixed incomes are more economically vulnerable.
3. Let’s keep more
Minnesota “wielders of wisdom” in Minnesota.
While the relationship between state social security exemptions and senior’s “heading for the hills” is inconclusive at best and non-existent at worst, the key question regarding the behavior of these seniors is to what extent exempting Social
Security would actually keep them from “saddlin’ up?”
Homesteads of persons age 65 or older; valuation increase prohibited
This proposed legislation– without question– hits home for many of our elderly residents, given our recent/present estimated market value ascent.
Under the proposal, submitted to the tax committee at the end of February, “The estimated market value for class 1 property and that portion of class 2a property consisting of the house, garage, and surrounding one acre of land, may not exceed the property’s estimated market value for the preceding year, provided that as of the assessment date the property is owned and occupied as a homestead by a person that is 65 years of age or older. In the case of a married couple, both of the spouses must be at least 65 years of age regardless of whether the property is titled in the name of one spouse or both spouses or titled in another way that permits the property to have homestead status.
“This provision would not prohibit an increase in estimated market value attributable to improvements made to the property.”
Should the proposed legislation make it through the gauntlet, it would become effective beginning with assessment year 2020 for taxes payable in 2021.
Why this is relevant
Face Aging MN, a statewide campaign to raise awareness about the issues that accompany the reality of a rapidly aging society, determined Cook County’s senior population would increase while the rest of the adult population will drop. It is estimated by the year 2030, 35 percent or more of our population will consist of “seasoned folks.”
Fact is sixty-thousand Minnesotans turn 65 this year, next year and every year through 2030. Soon, 25 percent of the State’s adult population will be 65 plus.
Consider: the median age in 2018 in Minnesota was 38.1. “Now, half the U.S. population is over the age of 38.2,” according to Luke Rogers, Chief of the Population Estimates Branch at the Census Bureau.
The state of Maine, with a median age in 2018 of 44.9, is considered to represent the state with the highest median age in the country.
The Polar Star State is gonna have to take a back seat to the fifth least populous county in the North Star State, Cook County, whose median age in 2018, according to the 2018 American Community Survey was a whoppin’ 52.3!
We’re certainly not getting any younger up here folks, clustered along the northern arc of the Keweenawan Rift.
Senior economics writer, Andrew Soergel, writing in the September 2019 issue of U.S. News & World Report, challenged, “The aging U.S. population is perhaps the most seismic demographic shift business leaders, state legislatures and health care providers will face in the next few decades …”
It remains to be seen how our state legislatures will respond.
Former Cook County Commissioner Garry Gamble is writing this ongoing column about the various ways government works, as well as other topics. At times the column is editorial in nature.
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