By Martin Kaste
February 15, 1999
Members of the House and Senate will sit down this week for what promises to be
lengthy negotiations over tax rebates. Legislators in both chambers say they
want to find a way to send the rebates to taxpayers as simply and efficiently as
possible. But if experience is any example, that's easier said than done.
THERE'S A DECENT CHANCE the state of Minnesota has tried , and failed, to
give you money. Last December, the Department of Revenue revealed that an
estimated 300,000 Minnesotans never filed for their 1997 property-tax
rebate, and an estimated $54 million still sits in state accounts,
unclaimed. An additional $50 million is likely to stack up this year, as
tax filers again forget to claim the 1998 rebate.
Now, as the House and Senate tussle over the planned 1999 rebate, both sides say
they want to find a better way to do things:
I think there will be better success in people getting
Senator Doug Johnson chairs the Senate Tax Committee.
You know, you won't catch everybody, but the Department of
Revenue this time is making an extra-special effort to make sure people get their
rebates. Checks will be automatically mailed, rather than having people apply
for them, so I'm hoping the percentage of those goes up quite substantially.
Johnson and Senate democrats are backing a version of Governor Ventura's sales-
tax rebate proposal, which would automatically send rebate checks to everybody
who filed for the 1997 rebate. But what about all those people who never filed
for the '97 rebate? Well, they can still file late - until April 15. And even
if they miss that deadline, they might still get a check, because Senator
Johnson has been tinkering with the Governor's plan, adding new ways for the
state to dredge up some record of your existence and send you a check.
I suppose every one of us has made a mistake or two
in our lifetimes, and we've been learning as we go along, even in the past
month, and I think this rebate gets fairer and fairer for Minnesotans as we work through it.
The problem is, as they stretch the plan to include more people, the formula
becomes that much more complex. At the moment, the Senate is proposing a 30% rebate of the sales taxes you paid over two years, which the state would calculate from your adjusted income, and which it pays to you using data from your 1997 property-tax rebate.
Confused? Revenue Commissioner Matt Smith doesn't blame you.
We've heard this from taxpayers a lot in recent years in dealing
with the rebates. "Why do you collect it in the first place?" and "Isn't there a simpler way?". And I agree.
But he says the hard reality is, giving the surplus back is not as simple as
some politicians make it out to be.
There's always a trade-off between simplicity and
fairness in the tax system, and in order to reach as many people as possible,
especially those people who don't have an income-tax liability, we have to reach into
all the records we have to find as many of them as possible.
This argument does not fly with conservatives at the state capitol. Dave Strom,
of the Taxpayers League of Minnesota, says the growing bureaucracy of rebates
just serves big government.
The one thing we've learned over the past couple of years is
that it's easy for the state to over-collect and it's just as easy for the state
to under-return. This is a bureaucrat's dream. They get more money in, and they
give less than they say back.
Strom and his group are lobbying for lower tax rates across the board, to
prevent surpluses and rebates from happening to begin with.
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The Minnesota Department of Revenue has established a
tutorialon applying for the property-tax rebate.
The Ventura administration agrees in principle. Revenue Commissioner Smith
says he'd love to dispense with annual rebates.
The rebate is a lot of work for a lot of people around
here, and it's a lot of work for taxpayers, and even the after-the-fact work to
figure out who didn't get it, who should have got it, how to identify those
people. It's a lot of work that in other years we could spend on helping people
with more difficult tax problems, or going after people who aren't trying to
comply with the tax laws.
But Smith says does not think the state will break the rebate cycle any time
soon, because even though he and Ventura agree that it's time to lower tax
rates, they're not likely to go along with the deep cuts sought by Dave Strom
and the Taxpayers League. Smith says if the state cuts rates too much, it could
run short of money when the economy cools down, and then it would have to go
back to taxpayers hat in hand. And as messy and inconvenient as rebates may
seem, they're far preferable to a surprise tax hike.
Martin Kaste covers the Capitol for Minnesota Public Radio. You can reach him
at email@example.com .