Sen. Scott Dibble and Rep. Frank Hornstein in our Minnesota Legislature have promised to introduce legislation that will make our homestead property taxes fair and equitable. This effort must be applauded and supported by all Minnesota homeowners because it will be better than the famous Proposition 13 in California and it will truly rehabilitate our homestead property tax.
California’s Proposition 13 protects homeowners from excessive tax burden, but it does not make it fair and equitable. However, Dibble’s and Hornstein’s proposed legislation will make our Minnesota homestead property taxes fair and equitable for everybody, including the government. It will address the core problem of our homestead property tax concept rather than trying to fund relief programs for the aggrieved taxpayers.
We perpetually hear homeowners complaining about their high property tax burdens that never get fixed or corrected. This complaint has been going on for a long time and the Legislature has been perpetually responding with various relief programs. However, now, Dibble and Hornstein will finally address the rogue nature of our homestead property tax with an objective analysis from the Minnesota Department of Revenue.
It turns out that the homestead property tax burden, for the whole group of Minnesota homeowners, is around 3 percent, or less, of their taxable incomes. For example, the total taxable income of all Minneapolis households was about $7.76 billion and the total property taxes paid by those households was about $240 million. That translates to about a 3 percent burden. But we know that a 3 percent burden is not uniformly applied to all households. That is the core problem of our present homestead property tax concept because some of us pay 40 percent while others only 1 percent. However, if every household paid the 3 percent, we would get the same tax revenue of $240 million.
The proposed legislation will adjust every household’s property tax burden, at the end of the year, to a uniform percentage of their taxable household income. The uniform percentage will be calculated by the DOR from the data collected on each taxing district.
As an example, let us take the 3 percent as our uniform rate for Minneapolis. Then let us take a home that has a $3,000 property tax attached to it. If the owner of that home has a taxable income of $100,000, then his tax burden is right in line with the uniform rate. But if the owner’s income was $50,000 then his tax liability, at 3 percent, is $1,500 and he would get a refund of $1,500. But if the owner had an income of $150,000 then his 3 percent liability would be $4,500 and he would have to pay an additional $1,500.
The proposed legislation will correct the inequitable tax burdens that we have now while insuring the same tax revenue to our local governments. Please call your legislators and give them praise for finally proposing a fair homestead property tax adjustment where every body pays their fair share.