DFL’s paid leave proposal: an expensive, over-engineered hammer
What will the DFL’s paid family and medical leave mean for you? One of the centerpieces of Gov. Walz’s “One Minnesota” budget is its proposal for paid family and medical…
According to the Minnesota Management and Budget (MMB), preliminary results indicate that for the 2022 Fiscal Year — which started July 2021 and ended June 2022 — Minnesota collected a total of $30.3 billion in tax revenue. This is 10.7 percent more than what was forecast in February this year.
As MMB reports, the surplus is up due to higher than expected tax collections for all three major taxes — individual income, corporate income as well as sales tax — with the majority of surplus coming from individual income taxes.
Minnesota’s net general fund receipts for FY 2022 are now estimated to total $30.329 billion, $2.927 billion (10.7 percent) more than projected in the February 2022 Budget and Economic Forecast. Net receipts from all major taxes exceeded the forecast. State revenues in the final quarter of FY 2022 were $2.260 billion (29.5 percent) more than forecast in February.
Net individual income tax receipts are estimated to end the year $2.389 billion (16.5 percent) more than forecast. Gross income tax receipts were $1.801 billion above the forecast, and refunds were $588 million less than expected….
Net general sales tax receipts are estimated to end FY 2022 $88 million (1.3 percent) above the forecast. Gross sales tax payments were $53 million above the forecast,
and refunds were $35 million lower than expected.
Net corporate receipts were $437 million (18.4 percent) more than forecast. Gross corporate tax payments were $423 million above the forecast, and refunds were $14
million lower than expected. Other net revenues were $13 million (0.3 percent) more than expected.
According to MMB, there is a chance that a good portion of the surplus can be eaten up in 2023 as Pass-Through Entities claim some of their business income as credits on their individual income returns. As of current, MMB estimates that the amount that could be used as credits could be as high as $1.359 billion.
However, MMB also states that it’s hard to know if the whole $1.359 billion could be issued out as refunds given that recent “processed returns indicate that many taxpayers with PTE credits are receiving smaller refunds than the size of their credit.”
But even assuming that the whole $1.359 billion is given out in refunds, tax collections for FY 2022 would still be about $1.5 billion more than was forecast in February.
Certainly, the weakened growth outlook might have some impact on tax collections going forward. But for right now, Minnesota has not only collected more money than needed for the 2022 Fiscal Year, but it has also collected a higher surplus than was forecast in February.
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It is mind-boggling enough that with an $18 billion surplus, Minnesota DFL lawmakers have expressed no interest in lowering taxes for Minnesotans. But what is even harder to rationalize is…