GUEST Column


With historic state budget surplus, it’s time to eliminate taxes on all Social Security income

On December 7, our state’s economic experts unveiled some startling budget news: Minnesota is now projected to see a $7.746 billion budget surplus for the current fiscal year. This is the largest surplus total in Minnesota’s history, and one few had predicted.

It sets up an interesting Capitol showdown next session in terms of how to allocate this money.

Typically when we have a budget surplus, Democrats want to spend the money on state government programs while Republicans want to use it to provide Minnesotans with tax relief. Judging from what I’ve heard from legislative leadership over the past couple of days, I expect this trend to continue.

There is one area where we must spend some of our available dollars, and quickly. Minnesota’s Unemployment Insurance (UI) Trust Fund was drained due to record setting unemployment claims during the pandemic. In fact, we now owe more than $1 billion to the federal government as it covered the costs when our state funds were depleted.

That bill has now come due, and on December 15, payroll tax rates increased on Minnesota’s business owners by 15% or more to replenish the fund.

With a nearly $8 billion surplus and more than $1 billion in COVID relief money at the state’s disposal, local business owners should not be forced to pay higher taxes, especially when they’re already facing supply and employment issues. There’s literally no excuse for the State of Minnesota to ignore this problem.

There’s also no excuse to continue ignoring Social Security income tax relief.

During the 2017 session, lawmakers approved a bipartisan tax relief law that addressed Social Security. It provided nearly 284,000 senior citizen tax filers with tax reductions and eliminated the state income tax on Social Security benefits for 72,000 of them.

This session I am once again chief-authoring legislation that would eliminate state taxes on Social Security benefits for ALL senior citizens. If my bill is approved, nearly 358,000 Minnesotans would see an average savings of nearly $1,100 each.

As I’ve said before, these are men and women who, for decades, had money withheld from their paychecks for Social Security, a federal program to provide them with a source of income upon retirement. Yet once they hit retirement, Minnesota’s state government demands a cut of their meager income source.

It’s truly senseless. The State of Minnesota should not be looking at a senior citizen’s limited income as a source of funding for state government programs, yet Minnesota continues the practice. Enough is enough. With an $8 billion surplus, we can right this wrong once and for all and have plenty of money left over.

With a DFL-controlled House and governor, and a Republican-controlled Senate, it will be interesting to see what sort of budget agreement is ultimately reached. But it’s my hope that significant tax relief – especially on Social Security benefits – will be included.

December 22, 2021