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Guest Opinion: Time to lessen the state tax burden of private cabin owners

Property taxes will be due soon again to Minnesota counties, not only for homesteads but for cabins and hunting land. But cabins and hunting lands will also pay an inexplicable tax, the Statewide Business Property Tax. A disingenuous tax system l...

Property taxes will be due soon again to Minnesota counties, not only for homesteads but for cabins and hunting land. But cabins and hunting lands will also pay an inexplicable tax, the Statewide Business Property Tax. A disingenuous tax system lumps them into the same category as commercial and industrial property. For families or individuals with cabins across the state, the payment of business taxes is a real burden. This misguided 16-year-old tax is in dire need of reform this session, since the Legislature turned its back on two bills in the 2015 session.

This inequitable tax falls mainly on private owners with an average age of 62 according to a statewide survey eight years ago by the Minnesota Lakes and Rivers Advocates. It affects the quality of our lakes, land and overall environmental stewardship. Cabin property tax pressures can often cause the sell off of larger, privately held tracts to outside developers, giving away the personal environmental care of front-line landowners, many who have had their property for three and four generations. Moreover, this tax doesn't even readily benefit the local county in which it's paid, it goes into the state's general fund, thus depriving cabin owners and counties of direct benefits.

Including cabins and hunting shacks on the State Business Property Tax was part of the tax reforms in 2001 under then-Governor Jesse Ventura. In 2001 the Minnesota legislature created the State Business Property Tax which applies to commercial industrial property and, inexplicably, cabin properties.

Originally, a portion of the tax was intended to go to local school districts, but was redirected to the State General Fund the year following enactment. This new tax included an automatic inflator that over time has increased to almost $1 billion a year in recent years. Unlike commercial and industrial concerns, family cabins are not income-producing properties. Unlike businesses, cabin dwellers cannot raise prices to defray the costs of the tax. And unlike these larger entities that operate year-round, Minnesota resident seasonal property owners only occupy/utilize their properties, on average, 93 days per year, according to a University of Minnesota study, "Profile of Second Home Owners in Central and West Central Minnesota." And they use far less of the tax funded services and facilities than year-around residents.

In effect, owners of private cabins and hunting land subsidize the Commercial/Industrial property tax category. In 2014, the Statewide Business Property Tax totaled over $850 million, of which seasonal property paid more than $40 million.

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Clearly, they don't belong in this slot. Perhaps the architects and guardians of this inappropriate tax believe that cabin owners are as a group moneyed people able to pay the tax. But the facts show otherwise:

• 55 percent of seasonal property owners are retired and over the age of 62 and 45 percent live on fixed incomes and are over the age of 65.

• In 2005, for example, average seasonal property owner household income in 2005 was $58,383. In 1999, the average seasonal property owner income was $58,504, and in 1995, $53,682.

• 86 percent of seasonal properties have homes, cabins or trailers on their property but 62 percent are not winterized and not inhabited during the winter months.

In the last legislative session, a number of bills in the House emerged that would have either slowly phased out the State General Tax, remove cabin properties from the tax or eliminate the inflator on the tax. Unfortunately, the Legislature did not take action to change the State General Tax in 2015.

Most cabins will soon be opened again. And with the Legislature in session, cabin owners and anyone who cares about the environment-including most owners who are faithful caretakers of our natural resources-should write to your legislators about the need to end this onerous tax.

Jeff Forester is the executive director of Minnesota Lakes and Rivers Advocates.

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