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Our View: In Minnesota, even loan-debt forgiveness is taxed

Don’t expect legislative fix anytime soon

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Jeff Koterba / Cagle Cartoons
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This past legislative session, lawmakers failed to finish a $3.9 billion tax plan or $4 billion in spending for nursing homes, schools, law enforcement, and other areas — among the way-too-many matters left undone in spite of how critical they were to Minnesotans.

The Legislature didn’t even publicly consider a bonding bill, once the only reason for sessions in even-numbered years like this one, to responsibly invest in the upkeep of public amenities, infrastructure, and public spaces.

So much do-nothing was in spite of the state having an unprecedented $9.3 billion budget surplus. That’s cash in the state’s coffers doing no one any good when it’s not being invested to boost Minnesotans who really need it and to help the state bounce back from the financial devastation of shutdowns and other tolls from COVID-19.

Now, while it’s commendable that lawmakers from both parties are expressing support for revising the state tax code so student loan-debt forgiveness won’t be taxed as income (yes, taxable income), forgive Minnesotans for being skeptical that it’ll happen anytime soon — or at all.

If embarrassment from the previous session’s legislative shortfalls hasn’t been enough to prompt lawmakers to find agreements so they can be called back by the governor for a do-something special session, student loans being taxed is unlikely the issue to move many of them.

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This current batch of legislators also couldn’t be convinced to lift a finger to help knowing that unemployment benefits for hundreds of laid-off Northshore Mining employees in Northeastern Minnesota will run out ahead of next year’s session. They were asked in July by Rep. Rob Ecklund, DFL-International Falls, to come back to St. Paul for a special session to extend those lifeline benefits. Crickets.

Legislators additionally ignored a letter from 17 organizations around the state representing cities, counties, townships, and school districts, pleading for legislative help with “significant challenges” and “pressing local needs” “that should not wait.” More crickets.

Lawmakers failing to get their work done — on time and for the good of all state residents — has become a frustratingly regular and unacceptable occurrence. We citizens have every reason to be upset, not that it seems to do any good year after year. We continue to send elected state representatives and senators to St. Paul to compromise, to reach agreements, and to help us through responsible lawmaking and legislating, and they continue to disappoint. And then run for reelection.

Regarding student loan debt, Minnesota and Wisconsin are among only seven states that tax debt forgiveness. We’re outliers. No matter how you may feel, politically or otherwise, about President Joe Biden’s plan to offer forgiveness to former students, as Senate Majority Leader Jeremy Miller, R-Winona, expressed in a statement last week, “We (in Minnesota) often try to conform to the federal tax code for ease and convenience of taxpayers.”

Minnesota taxpayers appreciate that — almost as much as we would celebrate lawmakers actually doing their jobs on our behalf. And there’s a list of matters right now that need doing and that shouldn’t be made to wait until the start of a new legislative session in January. It’s a list that frustratingly just keeps growing.

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From the editorial: "There are all sorts of politically strategic reasons to refuse to publicly face voters and answer hard questions, but they tend to serve only the candidates while constituents and the voting public are snubbed and shortchanged."