The Solution

The homestead property tax is not working if a majority of us are over burdened and a minority under burdened. That kind of inequity is a hallmark of an unjust and unconstitutional tax system.

In my previous blog post ( Article X ), I describe why it is impossible to levy an assessor driven tax that is constitutional and as fair as an income driven tax. Therefore, the logic tells us that we need a change. But unfortunately the options to change the assessor driven tax have failed, leaving us with the status quo homestead property tax that remains unjust.

We measure our tax burdens in percentages of our incomes. We know that our individual homestead property tax burdens can be very high, but we don’t know if it is our fair share or not. However, now we have information at the Minnesota Department of Revenue (DOR) that tells us what our individual fair shares are. Just click the MN DOR button above to see the chart.

The DOR has taken our total assessor driven homestead property tax revenue and equated it as a percent burden of our total homestead incomes. It means that the average percent burden, in each of the taxing districts, is also our individual fair share that will produce the same tax revenue as the assessor driven tax.

The reason I am presenting the DOR data is to illustrate that we don’t need to change how our homestead property taxes are collected to make them fair. All we need to do is to adjust our individual taxes by applying the DOR’s fair percentage of our incomes.

The idea of adjusting our homestead property taxes based on our incomes, after they have been collected, is not a new concept. It is being used today for property tax relief that is commonly referred to as the “circuit breaker.”

Since our legislators are vetted in the “circuit breaker” of today, they should not have any objections to a “circuit breaker” of tomorrow that is applied to all homeowners, rather than to the low and middle income home owners only.

The new “circuit breaker” will become an equalizer rather than a relief program.
For example, St. Paul’s fair share is 3% (DOR chart). Therefore, if you own a home in St. Paul and your taxable income is $100,000, your fair share of property taxes is $3,000. But if you paid $3,500 in taxes, you will get a refund of $500. And if you paid $2,500, you will have to pay another $500.