HomeMy WebLinkAbout1975 11-25 Circuit-breaker to ease taxpayers' burden in '76 REVIEW Circuit-breaker
to ease
taxpayers ' bburden in 76
5
by Scott Carlson �i6V 197Ctaxesof over$600)will receive tax relief in the amount of$150 on
When the Maplewood city council took action last month in their income tax. This is an addition to the existing $325
adopting the annual budget of more than$6.74 million, an ap• maximum credit on the property tax bill for homestead credit."
proximate 27 percent increase compared to 1975, that Property taxpayers will have ready an easy-to-read table to
represented a four mill hike over the previous year, calculate what their exact tax will be at a later date. For the
Ordinarily that would have spelled trouble for local property present,however,the figures are available on a graduated scale
owners because along with the increase in the city mill rate ranging from one percent to four percent of what is considered
assessed valuation in Ramsey county increased by 10 percent on allowable taxation of a person's income.
residential properties. No increased valuation was made on For example,if a homeowner has an income of$15,000 and
commercial and industrial property.Add to that the restrictions pays$1,000 in property taxes on a home assessed at$20,000 that
of the Fiscal Disparities Act and you quickly learn that the city is means he is in the$2,500 to$19,999 category. He can expect to
being forced to put greater reliance on the property tax as a ante up 1.5 percent of his income for property taxes.
source of income. But since he is eligible for the maximum tax relief benefits
But a state law recently passed,called a"circuit-breaker," adjustments have to be made. While he will pay $225 what
is likely to offset the burden of any tax increases and bring relief remains is$775 in overload.
to the taxpayer in 1976.The law combines the current homestead The $475 in credit is to be reduced by the amount of the
credit law with a formula of taxation based on the level of income homestead tax or$325.The difference between the$475 and the
homestead credit is $150, which will be paid directly to the
earned in each household.
The circuit-breaker, much like the electrical circuit- homeowner by the state in the form of a rebate check.
breakers in a home,will act to cut off tax overloads. Its benefit Under the new legislation no property taxpayers will get less
will be mainly realized by people earning between $10,000 and relief than they currently are entitled to receive.
$20,000 annually. The income adjusted homestead credit also applies to ren-
Renters, mobile home owners and senior citizens will also ters and mobile home owners. Twenty percent of the gross in
come of renters will be considered in the calculation of relief.
receive benefits of the new tax legislation. Ashworth,in assessing the impact of the legislation,said,"I
"The circuit breaker has the same connotative meaning see the primary emphasis taking away the burdens on the
that of a circuit-breaker in a house," explained Donald Ash property tax on local services...I see that as the real crux of the
worth, Maplewood's finance director. "When an overload exists legislation.
the circuit breaker will step in and prevent an overload from
destroying the system." "It provides no direct monies to the city but it does provide
relief to the local property taxpayer.
UNDER PRESENT practice the state pays up to 45 percent The following table lists the amount of income levels at
of a homeowner's property taxes with the maximum benefit which certain benefits can be received:
being$325.Under the new legislation the maximum can extend $ 0 to$ 2,499, 1.0 percent, up to $475
up to $475. 2,500 to 19,999, 1.5 percent, up to $475
As a person's income increases from$10,000 to$20,000 the 20,000 to 22,999, 1.6 percent, up to $475
amount of tax relief,or maximum benefit, increases. Once the 23,000 to 25,999, 1.8 percent, up to $425
income exceeds$20,000 the individual still gets relief but in a 26,000 to 30,999, 2.0 percent, up to$375
diminishing amount, Ashworth said. 31,000 to 35,999, 2.2 percent, up to $350
Maplewood City Manager Michael Miller, in an Oct. 9 36,000 to 40,999, 2.4 percent, up to $325
memorandum to the city council, said, "The taxes on a$20,000 41,000 to 44,999, 2.6 percent, up to $325
market value home should increase $70 in 1976 due to the 45,000 to 52,999, 2.8 percent, up to $325
proposed city budget. 53,000 to 65,999, 3.0 percent, up to $325
"in 1976 the state circuit-breaker tax relief system will also 66,000 to 81,999, 3.2 percent, up to $325
go into effect,"Miller continued."Under this system the average 82,000 to 99,999, 3.5 percent, up to $325
taxpayer(making$10,000 to$20,000 per year and paying property 100,000 and over 4.0 percent, up to $325