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3/99 E Magazine Cover Story:  Sharing the Wealth: If We Shift the Tax Burden From Work to Waste Everyone Benefits

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3/5/96 GA State Senator Steve Morse:

Legislators Morse and Rest Unveil Economic Stimulus Bill; Tax Shift Cuts Property and Payroll Taxes, Reduces Pollution

State Senator Steve Morse (DFL-Dakota) and representative Ann Rest (DFL-New Hope) introduced (S.F. 2721) the Economic Efficiency and Pollution Reduction Act (EEPRA) at the State Capitol in St. Paul today. Representative Rest and Senator Morse said the EEPRA would provide property tax and payroll tax relief, reduce Minnesota’s dependence on out-of-state energy, and promote energy efficiency.

“The EEPRA is a revenue neutral tax shift that will reduce property and payroll taxes through an increase in taxes on energy sources,” State Senator Steve Morse said. “It’s time we reduce taxes on things we want to encourage and shift taxes to things we want to discourage, like pollution,” Morse added.

“Our estimates show that the EEPRA will raise nearly $1.5 billion annually when fully phased-in over five years,” Representative Ann Rest said. “The revenue raised will reduce property and payroll taxes by $750 million each year over that time.” That translates into a reduction of 17% in property taxes and a 7.5% drop in payroll taxes for business and the average Minnesota household,” Rest added.

The EEPRA imposes a broad energy tax on coal, gasoline, electricity, fuel oil, diesel fuel, natural gas, nuclear power, and other energy sources that would be phased-in over five years beginning in 1997. The Act also appropriates $20 million for low-income weatherization and $60 million for low income energy assistance.

“EEPRA places power in the hands of the people where it belongs,” Senator Morse said. “Under this legislation everyone’s property and payroll taxes will decline. Citizens can avoid the energy tax by driving less and making their homes more energy efficient. It’s their choice,” Morse pointed out.

“The intent of the bill is to prepare our state tax system for the 21st century. This bill encourages the citizens of our state, and leaders of business and government to reconsider our current tax structure, and to reward economically efficient, socially beneficial, and environmentally sustainable behavior,” Representative Rest said.

1/6/97 MN State Representative Ann H. Rest:

Economic Efficiency and Pollution Reduction Act

The Economic Efficiency and Pollution Reduction Act (EEPRA) proposes a new tax on carbon-based energy consumption and uses the revenue to reduce other taxes. The proposal is revenue neutral; all of the new tax revenues will be used to reduce other taxes.

EEPRA phases in over five years a tax on carbon-based fuels in Minnesota.

EEPRA imposes a tax on:

1. Consumption of carbon-based fuels (such as coal, natural gas, liquid fuels, and mixed municipal solid waste)
2. The sale of electricity produced by carbon-based fuels sold for consumption in Minnesota.

Carbon-based fuels used to generate electricity are exempt from the tax, since the tax is imposed on kilowatt hours sold and is paid by the consumer.

The proposed tax takes effect January 1, 1998, but is phased in over five years. The tax will be set equal to $10 per ton of carbon content in the first year, $20 in the second, and so on until a tax of $50 per ton of carbon content is imposed beginning in 2002. After the tax is fully phased in, it is estimated to raise about $1.5 billion per year. By comparison, Minnesota currently collects roughly $9 billion in total tax revenues annually.

The tax liability of energy intensive users, such as the mining, heavy manufacturing, and transportation industries is limited to 1% of their sales of Minnesota produced output. Revenues from the carbon tax will be used to reduce employers’ payroll taxes and to provide a refundable income tax credit to individuals.

Revenues from the tax that businesses remit (estimated to be about 60% of the total) will fund a credit against Minnesota’s employer’s social security tax.

The rest of the revenues will provide a per person, refundable income tax credit. This income tax credit will extend to every individual over age 16. Credits for dependent individuals will be paid to their parents or to the individuals claiming them as dependents under the income tax. Although the credit will be administered under the income tax, as with the earned income tax credit one need not have income tax liability to receive it.

An additional annual general fund appropriation of $125 million will be used to provide for remedies associated with the implementation of the new tax. This appropriation includes:

• $20 million for low income home weatherization program;
• $20 million for the low income energy assistance program;
• $30 million for capital and operating investment in transit programs, both in the metropolitan area and in greater Minnesota; and
• $5 million for a revolving loan fund to provide financing for businesses to make capital investments for energy efficiency and pollution reduction.