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Minnesota ranks 6th nationally for per capita state and local income taxes

It is no secret that Minnesota is one of the most highly taxed states in the union. We are one of the 43 states to have its own income tax, but the top rate—9.850 percent on incomes over $156,911—is higher than anywhere else apart from California, Maine, and Oregon. But it isn’t just ‘the rich’ who are hit with these high rates. Minnesota’s lowest income tax rate of 5.35 percent is higher than the highest tax rate in 23 states.

New data from the Tax Foundation shows how we compare nationally. In fiscal year 2015, our state ranked 6th nationwide for the amount of state and local income tax paid per person, $1,900. This is well above the national average of $1,144.

A couple of interesting things jump out from the map above.

First, note how Minnesota is an outlier regionally. Neighboring Iowa is about dead on the national average but North Dakota ranks 37th, taking just $709 in state and local income taxes per person. South Dakota-where Governor Dayton’s trust fund is located-doesn’t take anything. Given how easy it is to switch tax domicile, especially if you are rich enough to afford a decent lawyer, these sort of differentials are powerful incentives to do so.

Second, see Wisconsin’s relatively high ranking of 14th. Sure, this is below Minnesota, but it gives the lie to the idea that Wisconsin is some sort of bastion of small government, low tax policies. Despite what some would argue, comparisons between Minnesota and Wisconsin are not comparisons between ‘Blue State’ and ‘Red State’ but between ‘Blue State’ and ‘Purple State’. Wisconsin is not Texas and the St. Croix is not the Iron Curtain or the 38th parallel. In terms of the differences between the economic models on either side, it is more like the Rhine or the English Channel. Stillwater is much nicer than Calais, though.

John Phelan is an economist at the Center of the American Experiment. 

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