Center on Budget and Policy Priorities, State Income Tax Burdens on Low-Income Families in 1999
Minnesota's Income Taxes Among Most Fair to Working Families (2001)
Minnesota's Income Tax System Praised; Legislature Shouldn't Lose Sight of the Big Picture (2000)
Minnesota Budget
|
Minnesota Taxes
|
Federal Tax & Budget
Economic Self-Sufficiency
|
Minnesota Budget Bites
 |
|
|
 |
|
 |
 |
 |
|
 |
|
 |
ABOUT USThe Minnesota Budget Project is an initiative of the Minnesota Council of Nonprofits.
Minnesota Leaders Mustn't Rest on Laurels in Response to National Study Praising Income Tax Treatment of PoorOn April 13, the Washington D.C.-based Center on Budget and Policy Priorities released a report comparing the states' income tax treatment of low-income families. The report praises Minnesota, noting that low-income families in Minnesota don't begin to owe state income taxes until they earn incomes well above the federal poverty guideline.The report also identifies Minnesota as one of just a handful of states that provides refundable credits (the working family credit and the dependent care credit) to low-income families. For these low-income families, the state income tax system works like an income support system. At a time when state and federal welfare reform laws are encouraging more families to make the transition from welfare to work, Minnesota's favorable income tax treatment of low-income families is certainly welcome. Tax exemptions and credits boost the take-home pay of low-income families facing childcare, transportation, and other costs as they strive to become more financially self-sufficient. But while Minnesota policymakers should take pride in the findings of the report, it is critical to recognize that state income tax policy is just one strategy available to state lawmakers to assist families living in poverty. If we expect to make progress moving those in poverty from welfare to work, lawmakers need to consider and implement a wide variety of strategies, including providing job training, affordable housing, childcare and support, educational opportunity, and affordable health care. Kris Jacobs, the Executive Director of the JOBS NOW Coalition has long advocated job training as the best means of addressing poverty in Minnesota. "I don't want to suggest that progressive tax policy doesn't help, because it does. But the best path out of poverty for working families is a living wage job. In the past, we have focused on trying to attract new jobs to the state, but these jobs have generally been low wage, low benefit jobs. We need to shift our spending priorities from job quantity to job quality by providing more funding to train workers for higher paying jobs," argues Jacobs. Recent legislative sessions have addressed a variety of programs designed to serve low-income working families, but the results have been mixed. As an example, new legislation enacted during a special session in 1997 provided $30 million in additional state funding for the Minnesota working family credit by increasing the amount of the credit for families with children from 15 percent of the federal earned income tax credit to 25 percent. But other important programs that would have contributed significantly to assisting the working poor did not fair so well. The Governor's veto of the Family and Early Childhood Education bill, for example, killed legislation passed by both the House and Senate that would have expanded the dependent care credit and the Basic Sliding Fee childcare program for low-income families. These programs would have provided much needed assistance to thousands of low-income parents trying to move from public assistance to the workforce. The 1999 legislative session will be pivotal as the state and federal policies continue to dismantle the public welfare system. The primary purpose of the session will be to determine state budget priorities for the two-year period beginning July 1, 1999. Since many economists are predicting another sizeable state budget surplus, it is likely that the newly elected Governor and state legislature will preside over the largest budget appropriation in the state's history. To truly assist those striving to move from welfare to work, we need to enact legislation that combats the root causes of poverty, such as falling wages, inadequate housing, and deteriorating economic opportunity. And we need to ensure that the safety net is maintained for those who are unable to help themselves. April 16, 1998 |
About Us |
What's New |
Research & Analysis |
Events |
Sign Up for Updates
2314 University Ave W. #20 |