By Sen. Paul Gazelka, Guest Columnist
The 2013 Legislative Session adjourned last May with unprecedented tax and spending increases. During the interim an insurance client came to visit me with news that he is leaving Minnesota. He’s a successful businessman who lives in Florida for part of each winter. He’s a responsible citizen, willing to pay his fair share of taxes, particularly when he is able to help support the wonderful quality of life Minnesotans enjoy.
I asked him about his sudden decision to leave Minnesota. He said, “Gov. Dayton wants a ‘Snowbird Tax’ on Minnesotans living in other states for more than two months per year. There’s nothing stopping them from increasing taxes on everyone, I can’t afford to live here anymore.”
My client was deeply moved and very upset. I felt for him, I understood that he wasn’t only upset about having to leave Minnesota. He loves our state, and so do I.
The Snowbird Tax was removed from the tax debate, but it started the conversation about whether or not Minnesota was the right place for retirees to live. As the end of session 2013 saw substantial income and gift tax increases, I realized that we are all about to witness the greatest generational transfer of wealth ever witnessed in human history, and Minnesota is not ready to take advantage of it.
Baby Boomers nationwide are about to inherit $6 trillion from their parents. Minnesota has an opportunity to benefit greatly from this wealth transfer, but we will miss it if Minnesota’s tax policies chase them away.
As a result of last session, Minnesota has a new income tax rate of 9.85 percent. It is the second highest rate in the country and we’re one of two states with a gift tax combined with estate taxes. This will affect Baby Boomers inheriting their parents’ estates and could be the deciding factor in their decision to retire in Minnesota or go somewhere else.
Many states don’t require you to pay taxes on your retirement income. Minnesota requires you to pay 9.85 percent in taxes. What would you do? I know many Minnesotans are deciding to move. Sadly, we don’t just lose their money, we lose their incredible charitable and civic contributions to local communities. We lose their knowledge and experience that they bring to our neighborhoods and small towns and our local governments. We lose their example and wisdom they bring to the next generation.
We can do something about this. I believe we should give the money back to the folks that had to pay tax increases last year and repeal the gift and death taxes. Minnesota seniors want to stay in Minnesota. Let’s roll out the welcome mat for retiring Minnesotans.
Sen. Paul Gazelka, R-Nisswa, represents Senate District 9, which includes Morrison County.