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Debate rages over whether Minnesota loses taxpayers to lower tax states

In March, Center of the American Experiment released the report, Minnesotans on the Move to Lower Tax States 2016, in which I analyzed IRS migration data. These data track the state-to-state movement of taxpayers and their income. Because it tracks the movement of all taxpayers, it delivers an intensely accurate picture of national migration patterns.

The lead finding from the report shows Minnesota, on net, lost nearly $1 billion between 2013 and 2014.

This finding created quite a stir and focused public attention on whether Minnesotans are changing their residence to other states to avoid Minnesota’s high taxes. Three local TV stations covered the release of this information.

No surprise, those who supported the 2013 income tax hike on top earners, including the Minnesota Budget Project and the Commissioner of Revenue, immediately began trying to discredit the report. I answered their main criticisms one-by-one in this article here.

Critics, however, never questioned the central finding that Minnesota is, on net, losing taxpayers and, in particular, losing higher income earners who report over $200,000 in income. No one can deny the accuracy of these IRS data. These losses are irrefutable.

Knowing the data’s accuracy, I was shocked to see a recent Sunday Star Tribune headline that read, “There’s no evidence that ultrarich are fleeing Minnesota.”

Not even the strongest advocates for the 2013 tax hike would make such a bold, unqualified claim.

Yet, here’s the Star Tribune jumping into the debate and taking a side. So much for journalistic objectivity.

My issues with the Star Tribune article go well beyond the headline. Last Saturday, the Star Tribune published my response to this “news” article.  I co-wrote the response with Dale Kurschner, the editor of Twin Cities Business, because he happens to have recently surveyed professionals who advise wealthy clients and their survey shows wealthy Minnesotans are indeed moving in response to recent tax hikes.  Our data sources speak directly to the question of whether Minnesota is losing taxpayers to lower tax states, the Star Tribune’s sources do not.

Our response to the Star Tribune is certainly not the last word in this debate.  The IRS data and surveys of wealth advisers present clear and convincing evidence, which we will continue to communicate until Minnesota wakes up to the need for a friendlier tax climate.

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