If Gov. Jesse Ventura has his way, about 2 million Minnesota residents — and many University students — would get more than $200 in a tax refund that aims to give the $1.07 billion budget surplus back to the people who were taxed to create it.
Ventura’s plan, released Thursday, would give property tax refunds based on the estimated amount of sales tax each household paid in the past two years. In this way, Ventura hopes to avoid paying federal tax on the refunds, while giving more money back to the middle-income ranges.
“The idea of trying to get the money back to Minnesota residents without having a good share of it going back to Washington is certainly good for Minnesota,” said Edward Foster, a University economics professor.
House Republicans have proposed a plan with refunds based on the income tax, but Acting Revenue Commissioner Matt Smith said those plans would leave out about 280,000 Minnesotans who paid no income tax, due to low income or other exemptions.
Ventura’s proposal would identify a household’s income, and using Department of Revenue research, estimate the percentage of sales tax paid over the last two years. Depending on the budget surplus as of June 30, about 35 percent of that tax would be returned Aug. 1.
The rebate will automatically be distributed to those who were eligible for the property tax rebate last year and who filed a 1997 tax return claiming the rebate, which was paid in August 1998. Those who haven’t filed for that rebate can still do so.
But there is a floor and ceiling on the amount refunded, meaning that higher income households will receive a smaller percentage of sales tax, as more of the money goes to the lower-income households.
Ventura’s team said that lower- and middle-income households pay out a higher proportion of their income in sales taxes than do higher-income families.
“It will automatically give back a larger refund as a share of income to poor people and people with large families,” Foster said.
Smith said the plan may lean toward the middle class because that was Ventura’s plan all along for the refund.
“I feel this is more equitable and fair,” Ventura said.