Walz: Don’t Tax Billionaire Geezers
To: Governor Tim Walz
1006 Summit Ave.
St. Paul, MN 55105
Dear Gov. Walz:
This letter is to urge you to support the complete elimination of state taxation of Social Security benefits. Nine months ago, when it was estimated that the state of Minnesota would have a $9.25 billion surplus, you announced that a budget package had bipartisan agreement and, among other things, would eliminate all state taxation of Social Security benefits. In fact, you campaigned on that bipartisan agreement, even after Republicans withdrew their support. So it was surprising when you stated last month that you would not be “proposing a tax cut for the wealthiest of Minnesotans,” and that the “… richest Minnesotans … billionaires” did not need a tax cut on Social Security. It is strange tax policy that a cut in state taxation of Social Security benefits can be accommodated with an estimated $9.25 billion surplus but is too expensive to be accommodated by a $17.6 billion surplus.
The discovery that Minnesota billionaires would receive an “unneeded” benefit is unfortunate for a number of reasons.
Is Minnesota in danger of being overrun by billionaires? Have Mark Zuckerberg and Elon Musk silently slipped into our fair state to establish a tax residency? The governor apparently has insight into this inflow because, frankly, at most, if they chose, there are four billionaires paying taxes in Minnesota. And we would like more of them to live here. Billionaires often build companies (see Zuckerberg and Musk), employ thousands of people, pay lots of taxes, and give to a wide variety of charities.
Not even Minnesota taxed Social Security benefits for the first 47 years that the program existed. It wasn’t until 1984 that the federal government first started taxing Social Security benefits. But note the rationale for taxing Social Security benefits at the federal level: It was done to “save” the solvency of the Social Security Trust Fund, and all Social Security benefit taxes are dedicated to the Social Security Administration to keep it solvent. That justification, of course, does not apply to the state of Minnesota.
That is why only 11 states currently tax Social Security benefits, and the usual high-tax states of Illinois, California, New York, New Jersey are not among them. Nor does the District of Columbia level a district tax on Social Security benefits (who lives there?).
At the federal level, a much better approach to taxation of Social Security benefits was introduced by U.S. Rep. Angie Craig of the Second Congressional District (hereinafter a haven for tax-dodging billionaires). Her proposal was to abolish all federal taxes on Social Security benefits while raising the cap for individuals earning more than $250,000 annually. According to nonpartisan analysis, Craig’s legislation would also improve the long-term solvency of Social Security. Gov. Walz, you should follow fellow DFLer Angie Craig and other DFLers.
A number of newly elected DFL senators have also urged that Minnesota stop taxing Social Security benefits. Sens. Rob Kupec of Moorhead, Heather Gustafson of Vadnais Heights, Judy Seeberger of Afton, and Grant Hauschild of Hermantown issued a joint statement pointing out that taxing Minnesota seniors leads to retirees leaving our state. This support by newly elected DFL senators is noteworthy because they made the issue of Social Security tax elimination a key priority during their campaigns, and, secondly, none of their geographic areas are noted for a concentration of billionaires or other greedy geezers. And, as noted, the state currently has a projected surplus of $17.6 billion.
So, what’s really going on here? Few states (and fewer as the years go on) stoop to tax Social Security benefits. Minnesota already exempts about half of Social Security recipients from taxation, and there are very few billionaires in Minnesota paying taxes in any event. Nor is the taxation of Social Security benefits in any way connected to increasing solvency of the program. It is a bargaining chip to be used to achieve a bipartisan agreement, the real reason Walz supported a full repeal in May. Mark Twain once said that “No man’s life, liberty, or property are safe while the legislature is in session.” This governing philosophy apparently applies to Social Security benefits.
What is really wrong with calling out billionaires to be excluded from Social Security tax treatment is rhetoric. Singling out the top 1% is nonsensical tax policy, but some believe it is beneficial political policy aimed at the DFL base. That is a misreading of the common sense of the Minnesota voter as shown by the election of the above-mentioned DFL freshman senators. But if we are really going to condition elimination of Social Security benefit taxation for the rest of us on treating billionaires differently, we have a proposal.
Require all billionaires who claim an exclusion from state taxation of their Social Security benefits to file proof with their income tax that they have contributed an equivalent amount to a Minnesota-based charity. Charities will be rolling in dough.
Sincerely yours, and looking forward to tax-free Social Security