American Experiment Urges Gov. Walz to Immediately Drop Tax Increases in Light of Budget Surplus
(Golden Valley, MN) Center of the American Experiment today urged Gov. Tim Walz to immediately drop his proposals for tax increases totaling over $1.6 billion for the next biennium in response to a new budget forecast that now projects a $1.6 billion surplus. The Center also offered a package of tax reforms that would take Minnesota out of the bottom ten in national tax rankings.
“Gov. Walz’s tax increases were a horrible idea when he announced them, now they are a complete non-starter,” said John Phelan, economist at Center of the American Experiment. “Minnesota should resist the urge to spend more and instead use the opportunity of this surplus to reform taxes to put our state in a better competitive position coming out of the pandemic.”
Minnesota is currently ranked 46th among the states on the Tax Foundation’s 2021 State Business Tax Climate Index. With a healthy budget surplus, there is an opportunity to make serious progress up these rankings by enacting some or all of the following tax reforms:
- Abolish Minnesota’s Estate Tax
Minnesota is one of twelve states and the District of Columbia to impose estate taxes. Minnesota taxes estates more heavily than most of these states, with the state’s starting rate of estate taxation — 13 percent — higher than any of the other jurisdictions that levy one.
- Abolish Minnesota’s Alternative Minimum Tax for Individuals
Minnesota is one of just five states that imposes an individual AMT.
- Eliminate Minnesota’s Alternative Minimum Tax for Corporations
Corporate AMTs exist to prevent corporations from reducing their corporate income tax liability beyond a certain level, and Minnesota is one of only five states — down from eight as recently as 2017 — which imposes one.
- Eliminate the State’s Marriage Penalty Tax
Minnesota is one of twenty-three states and the District of Columbia to have marriage penalties built into their tax codes.
- Conform to the Federal Depletion Schedule
Minnesota is one of thirteen states that doesn’t fully conform to the federal system for the deduction for depletion.
Center of the American Experiment is “Minnesota’s Think Tank.” For more than 30 years, the Center has been the most impactful and effective public policy organization in Minnesota, leading the way in creating and advocating policies that make Minnesota a freer, more prosperous and better-governed state.