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Quick, fly away, snowbird!

CC/Flickr/Bruce Bouley
Do we really want to chase retired people from our shores?

Like most Minnesotans, we cherish a special snowbird (in our case, Nana) who visits us each summer. She retired to Florida to take advantage of the sunny days — and declared herself a Florida resident — not just to avoid our income tax but because she is there a good chunk of the year. That is where she votes, pays taxes and volunteers. But since it is “hotter than tea biscuits” after May 1st and her grandchildren are here, we get her for part of the summer. So many of us spend summers with grandparents, often at family cabins; it is part of our heritage and the fabric of family life.

Kim Crockett
Kim Crockett

Gov. Mark Dayton is proposing that certain snowbirds become “part-year residents,” subjecting them to new taxes estimated to raise about $30 million over the biennium ($15 million a year). That is real money, but in the great scheme of things I have to wonder why the governor would want to get in grandma’s and grandpa’s grill for $15 million a year.

I am still digging into the details, but so far my research finds that snowbirds will pay income tax if they are here between 61 and 182 days and maintain an “abode” for at least 6 months.

An abode is currently defined under the 183-day residency rule as “a self-contained living unit, suitable for a year-round use, that is equipped with its own cooking and bathing facilities — in Minnesota.” It can be “rented or owned or occupied” (so I assume this means an apartment, condo, cabin, house, — heck why not an RV!).

Currently if you maintain a home here year round but only spend 182 days in the state, you can avoid residency taxes (all taxable income from all sources, including any earned while working in another state).

What about retirement income? According to the NCSL, states are largely free to tax retirement income, though most do not, with Minnesota being one of the exceptions. In Minnesota, retirement income is not exempt but “(T)axpayers aged 65 and over may be entitled to an exemption of up to $9,000 for single taxpayers and $18,000 married and filing jointly if both spouses are over 65. Income limits apply.” No wonder we get listed as “unfriendly” for retirement!

The MMB website says,

“Part-year residents will be subject to tax on their Minnesota-sourced income. … and a pro-rata share of all other income based on the number of days they are present in the state. A credit will be granted for income taxes paid on the same income to other states if the other state does not allow a credit for tax paid to Minnesota.”

If you are here for medical treatment (Mayo anyone?), the rules do not apply. Gee thanks.

This would capture folks who maintain a home for half the year and actually come to the state for at least 61 days. The reason? 

This proposal will make Minnesota’s overall tax system more fair by requiring those who benefit from Minnesota state and local public services for a substantial portion of the year also contribute to the cost of providing those services.”

Why would we make our retired parents keep track of their whereabouts when they are here to visit and enjoy their families during the summer? Why would we burden them with having to prove their whereabouts to the government in their golden years? The MMB website says they will have to keep records including, “planners, calendars, plane tickets, canceled checks, credit card and other receipts.” I know that folks trying to avoid the 183-day rule already do this, but this seems very invasive to me — and just stupid for a measly $15 million a year when we are spending about $30 billion in this state every year (state and federal funds).

Do we really want to chase retired people from our shores? Besides the loss to our economy, Dayton’s plan would deprive families of precious time with grandparents. How many retirees would sell or transfer their lake homes and cabins to adult children? Sell or drop the lease on condos and apartments? (I guess we can capture more taxes from the proposed 5.5 percent sales tax people would pay to consult with accountants, brokers and lawyers until they can get out of the state.)

All those special memories — and the neat things we treasure during our short, cherished summers — will be shortened to 60 days! Nana is no fool. She is mobile and so is her income.

The policy answers are for Minnesota to spend less and drop the income tax altogether. We should follow the lead of other states and go to a broad-based sales tax to avoid all this messy, personally invasive income-tax policy. We’d still have plenty of revenue to do the good things that make Minnesota such a great place to be any time of year.

Kim Crockett is chief operating officer, executive vice president and general counsel of the Center of the American Experiment. She is the executive director of Minnesota Free Market Institute at the center.

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Comments (7)

  1. Submitted by Jeff Klein on 02/20/2013 - 08:35 am.

    I could not have less of a problem taxing upper-middle-class snowbirds who can afford two homes and choose to stay six months plus a day in the state with the lower taxes while taking advantage of the high quality of life afforded to us here in Minnesota by virtue of our all paying our part.

  2. Submitted by mark wallek on 02/20/2013 - 09:56 am.

    Tax them

    Part year residents, individuals who can afford to maintain two places of residence, can afford the increase in taxes. Part year residents should be taxed at a higher rate.

  3. Submitted by Ray Schoch on 02/20/2013 - 10:10 am.

    Ms. Crockett is, alas, whining

    “All those special memories?” Do they all vanish if Nana – affluent enough to be able to afford to be a “Snowbird” in the first place –  visits less often, or for a few days less? Speaking as a grandparent, I think not.

    We (meaning Minnesota residents, legally defined) should do none of the things Ms. Crockett suggests in her final paragraph, precisely because following her policy suggestions will cripple the state’s ability to “…make Minnesota such a great place to be any time of year.” Having moved here from a state where most of the state government’s income derives from sales tax, I can vouch for the problems that arise when state income can – and does – vary dramatically from year to year, largely due to circumstances beyond even the suggestion of control by the state’s citizens or government. My income taxes in Minnesota are nearly 3 times what they were in my previous state of residence, where the sales tax reigned (and where the first $20,000 of retirement income is tax-exempt), yet my standard of living is probably better here, statistically.

    I’d like to live in a tax-free world, too, but the alternate reality Ms. Crockett would like to inhabit doesn’t exist on this planet. Jeff Klein is right on target.

  4. Submitted by Greg Kapphahn on 02/20/2013 - 02:56 pm.

    The Reason We Need to Make This Change

    Is because of all the snowbirds I know personally who actually spend LESS time with children and grandchildren in Minnesota than they otherwise would,…

    simply because staying a day over six months AWAY from us up here, means they are able to skip out on income taxes in Minnesota completely.

    But somehow they (and their families, here) STILL expect that all state, county, and local services will be provided to them, as needed, while steadfastly avoiding paying most of the freight for those services.

    Among those I know, affording the taxes they would have to pay if this rule is changed would not be an issue,…

    but for all of us NON snowbirds, the injustice involved in having some of our friends and neighbors paying no income tax in Minnesota despite living here for 6 months, minus ONE DAY, requires that the rules be changed.

  5. Submitted by L.A. Krahn on 02/20/2013 - 04:27 pm.

    Boomerang effect

    The prototypical snowbirds are healthy “young” retiree couples. Fast forward fifteen to twenty years, and the surviving widower likely has health issues and wants to be nearer to family caregivers back home, up north. The social services that individual returns to are expected to be in place, and the former snowbird is often much more frail than when they departed.

    Perhaps Texas, Florida or Arizona would voluntarily strengthen their statewide social safety nets to prevent such a return? Doubt it. Should origin-state snow-shoveling winterers voluntarily shoulder the majority of the load? Doubt that, too, but that’s what’s been happening.

    So, yes, it’s high time to close this “snowbird loophole”.

  6. Submitted by Carole Heffernan on 02/20/2013 - 09:53 pm.

    Couldn’t Agree More

    It would be lovely to spend cold months in warm places and and hot months in cooler places but it takes a certain amount of resources to do that. If someone has the financial resources to maintain two homes no matter how modest I suspect they also have the financial resources to pay a pro-rated amount of tax to support the services they receive even when not in residence.

    One might wonder why Nana didn’t plead her own case. Perhaps Nana is not concerned about spending a little more for her summers building those special memories with her grand-children. If it were me the cost of the time would not be how I measure it’s value. I would also take exception to anyone implying that what it cost me was how I measured the value of my time with those I loved.

    I would recommend that when one can no longer keep track of where they are and for how long perhaps it’s time for that person to remain in one state full time.

  7. Submitted by Beryl John-Knudson on 02/21/2013 - 08:08 am.

    Another footprint from the old “Minnesota Blue Print”?

    Sing no holy hosannas for Hannah Whomever; or anyone’s cherished-part-time, well endowed Nana sucking on tea biscuits in her Floridian cabana until they are too hot too handle… and then heading back home expecting a free ride sans taxes?

    Here or there, one must pay the taxes wherever one relaxes; two homes or one,eh?

    So much for the non-success of that greater footprint; a time-warp tidbit from The Center For the American Experiment and its ultra conservative policies initiated some years ago?

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