Statement on the Equity and Opportunity Tax Credit

On April 26, Governor Dayton formally announced that he would veto any tax bill that includes the Equity and Opportunity Tax Credit.

The tax credit being discussed in conference committee (Tax Conference Committee Bill Article 1, Section 35), creates a new 70% tax credit only for donations to foundations for educational scholarships. Minnesota Council of Nonprofits (MCN) opposes the inclusion of this tax credit because it provides special treatment for only very narrow giving.

  • Many nonprofits across Minnesota partner on a variety of programs necessary to build strong, thriving communities. All are worthy of equal treatment.

  • Many nonprofits work to increase student success and educational attainment – by ensuring students have a stable home to do their homework, provide food assistance, after-school programming, tutoring, mentoring, as well as music and arts programs.

  • This tax credit is unfair and creates confusion. For example, a parent who donates $3,000 in books for the library would be treated differently for tax purposes than a different parent who donates $3,000 for scholarships for that exact same school.

  • Charitable giving works best when equal tax benefits are given to all contributions made to 501(c)(3)s.

  • Elevating one narrow type of giving for this tax credit will only lead to similar requests by other organizations or activities instead of encouraging thoughtful and generous community-wide donations.

MCN strongly supports equal tax incentives that honor the deeply held tradition of Americans supporting 501(c)(3)s of their choice, based on their values. A better example is the incentive created in 1999, by then Rep. Tim Pawlenty, in partnership with MCN, to create Minnesota’s non-itemizer charitable tax deduction, which broadens and equalizes those who have access to the charitable deduction. Unlike the narrow focus of the Equity and Opportunity Tax Credit, this non-itemizer charitable tax deduction was equally used by over 204,000 Minnesotans in 2016 who donated to the 501(c)(3) nonprofit or religious organizations of their choice.

MCN does not wade into the education policy aspects of this tax discussion.

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