Governor Dayton Calls for Repeal of Minnesota Gift Tax
Last May, the legislature passed, and the Governor signed, a bill adopting a gift tax. In doing so, Minnesota became only the second state, along with Connecticut, to have a gift tax. The bill was signed in May and became effective July 1, 2013. Normally, bills passed in session do not become effective until January 1.
The newly adopted gift tax imposed a 10 percent tax on gifts totaling more than $1 million dollars over a lifetime. By making it effective so soon after passage, Minnesotans had little time to plan before the bill became effective. At the time of adoption, supporters argued that the new gift tax, along with other taxes passed, would not affect people’s plans to remain in MN. I argued that businesses, particularly small businesses, would begin relocating and many Minnesotans would also consider moving.
The Governor’s proposal is an admission that businesses and people are making plans to leave to avoid the tax. Minnesota Revenue Commissioner Myron Frans said in an interview, “We want taxes to be fair, whether on low-income or high-income people. And the gift tax didn’t make sense, and it’s complicated and caused consternation.”
Let’s hope that the legislature adopts Governor Dayton’s proposal to eliminate the gift tax. In other news, the Governor has also proposed changes to Minnesota’s estate tax. To learn more, click here.
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