Inflation: What didn’t cause it?
In the year to June, the Consumer Price Index rose by 8.5%. What caused this? Let us first eliminate some answers by looking at what didn’t cause this. As I…
The line at the post office this afternoon reminded me it is Tax Day. The dreaded day of the year to render unto Caesar the things that are Caesar’s. In honor of tax day, I want to share a conversation I overheard between two women while waiting in line at the post office and offer up the data that supports it.
“Well, this will be my last tax return filed in Minnesota! My husband and I are moving to Florida.”
“Oh, the weather will be so nice there, a nice change from here.”
“Not just the weather. We are mainly moving because taxes are so darn high here. Florida doesn’t charge a state income tax.”
“Nope, so my husband and I will get to keep more of our money.”
Minnesota has the fourth highest individual income tax rate (9.85 percent) out of 42 states and the District of Columbia. Seven states, including Florida, do not have a state income tax. Minnesota’s top corporate income tax rate (9.8 percent) is the eighth highest in the country.
These rates represent how much is collected in taxes compared to other states, but how well does our state’s tax system structure hold up? The Tax Foundation’s 2019 State Business Tax Climate Index ranks Minnesota 43 out of 50 (1 being the best, 50 the worst), making it one of the 10 worst business tax climates in the country.
We know taxation is inevitable, but if a state wants to remain economically healthy and competitive, it needs to recognize that its tax system matters. According to The Tax Foundation’s 2019 State Business Tax Climate Index:
Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system, and the long-term health of a state’s economy. Most importantly taxes diminish profits. If taxes take a larger portion of profits, that cost is passed along to either consumers (through higher prices), employees (through lower wages or fewer jobs), or shareholders (through lower dividends or share value), or some combination of the above. Thus, a state with lower tax costs will be more attractive to business investment and more likely to experience economic growth.
But don’t get discouraged. The reduction in federal income tax rates is positive. And you can always just do what I do and focus instead on April 15’s overshadowed holiday: National Rubber Eraser Day.