Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.
A historic investment in Minnesota kids
State's new child tax credit may be one of the most far-reaching nationally. It's an investment in healthy families and in the state's preeminent economic asset — its educated workforce. But families have to file a tax return to benefit.
October 7, 2023 at 11:05PM
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Although Minnesota has one of the lowest official child poverty rates in the nation — 11.6%, according to one national measure — a deeper dive into the state's data is far from reassuring.
A look at county rates reveals grim pockets where the percentage of kids living in poverty rivals levels reported in Mississippi, which has the nation's highest rate at 27.6%.
Mahnomen County in northern Minnesota leads the state with 33.8% of children under 18 living in poverty, according to the most recent Minnesota Department of Health data. Close behind are Beltrami and Cass counties. Disturbingly, rates are even higher for young children.
In Mahnomen County, about 40% of kids under 5 live in poverty. Lake of the Woods and Beltrami counties are close behind at 35% and 33.3%, respectively. Fourteen other state counties — all of them outside the metro area — have rates at or over 20% for this vulnerable age group.
The numbers are unacceptable from a moral standpoint. The data also illustrates a threat to the state's future prosperity. Minnesota's educated workforce is a preeminent economic asset, but one that is built on the foundation of healthy families. That's why a pioneering new state policy that could significantly reduce child poverty is a farsighted investment — one that merits the spotlight to ensure that Minnesota families take advantage of it early next year during tax filing season.
There's no catchy name for the measure. Instead, it's simply known as the state's new child tax credit. "Beginning with tax year 2023," families with children 17 and under "may qualify for a Child Tax Credit of $1,750 per qualifying child with no limit on the number of children claimed," according to the Minnesota Department of Revenue.
An additional point: "This is a refundable credit, meaning you can receive a refund even if you do not owe tax." Another important point: You need to file taxes in order to benefit.
Eligibility hinges on income, with the credit "phasing out" if income is over $29,500 or $35,000 for those who are married/filing jointly. Note the "phasing out." Those whose incomes exceed the threshold may not receive the maximum credit of $1,750 but still could receive a sum that's helpful.
In an interview with an editorial writer, Department of Revenue officials estimated that 300,000 Minnesota families — 36% of households with children — could benefit. The new tax credit was a priority of Gov. Tim Walz's administration and the DFL majorities during the 2023 legislative session.
Minnesota is now one of 14 states to offer a child tax credit, and several others are considering it, according to September 2023 Governing.com report. There's a reason initiatives like it are gaining momentum: Evidence suggests they work.
"The federal pandemic-era child tax credit expansion lifted millions of children out of poverty in the second half of 2021. But Congress allowed it to expire at the end of that year, and new U.S. census data shows the child poverty rate more than doubled in 2022, erasing the record gains that were made," the Governing.com report concluded.
Minnesota's initiative appears to be one of the most ambitious child tax credits in the nation. It covers one of the broadest age ranges — through age 17 — and the $1,750 maximum credit may be one of the largest amounts offered nationally. The phaseout is also vital. "It isn't just a program for the families at the very bottom. Middle-class families will benefit from it, too," said Luke Shaefer, a professor of social justice and social policy at the University of Michigan.
The tax credit is permanent and will be adjusted for inflation, two more reasons the Minnesota program is considered a national standout. Cost is estimated at $400 million a year.
The initiative was praised this week by Art Rolnick, an economist and former Federal Reserve executive, who is a prominent advocate for early childhood education. Rolnick lauded the focus on childhood poverty, especially when this issue usually lacks well-heeled lobbyists at the State Capitol. He also praised the state for following an evidence-based approach.
Along with other early education initiatives, the new child tax credit is "a continuation of Minnesota's investment in our people. ... It gives me a lot of optimism that Minnesota will continue to be one of the best economies in the world," Rolnick told an editorial writer.
Again, Minnesotans need to file taxes in order to benefit. While there's nothing that parents need to do right now, the Department of Revenue is ready to answer questions at 651-296-3781.
With the program's scope and cost comes a responsibility to track its results. A Columbia University analysis suggested the program could reduce child poverty in the state by up to 33%. Minnesotans should be hopeful it delivers but also demand the data in years to come to see the return on this historic public investment.
Editorial Board members are David Banks, Jill Burcum, Scott Gillespie, Denise Johnson, Patricia Lopez, John Rash and D.J. Tice. Star Tribune Opinion staff members Maggie Kelly and Elena Neuzil also contribute, and Star Tribune CEO and Publisher Steve Grove serves as an adviser to the board.
Now that Gov. Tim Walz’s vice presidential bid has ended, there’s important work to do at home. Reinvigorating that “One Minnesota” campaign is a must.
