High taxes and rampant fraud: a double blow to Minnesotans
On its own, fraud is disturbing. It presents a failure on the state government to safeguard taxpayers’ money, eroding trust.
But in a high-tax, high-spending state like Minnesota, the continued documentation of rampant fraud is a particularly heavy blow to taxpayers who have to shoulder the cost of an expanding government and its growing fiscal recklessness.
Minnesotans pay among the nation’s highest taxes
According to the Tax Foundation, Minnesota’s top rate of individual income taxes is the fifth highest in the entire country. Minnesota businesses also pay the second-highest corporate income tax rate. As of 2024, the combined state and local sales tax rate was the 15th highest.
As a share of income, Minnesota’s state and local tax burden ranked 12th highest in 2022. In 2023, Minnesota collected over $6,000 per person in taxes, ranking eighth-highest.
Figure 1: State and local tax burden as a share of state income, 2022
Minnesota’s economy is suffering under the weight of these heavy taxes, exacting an additional price on Minnesotans.
As American experiment has documented, Minnesota is the only state whose GDP per capita growth has lagged behind the U.S. average every year of the past decade. The state also trails in business creation and continues to lose people and income to other (low-tax) states, trends likely to persist.
Fraud hurts the most vulnerable
The Minnesota state government is slated to spend $33 billion during the 2026 fiscal year, from July 2025 to June 2026. Health and Human Services (HHS), which comprises spending on various means-tested programs for vulnerable Minnesotans, such as Medicaid, accounts for over a third of this spending. After including money from the federal government, welfare programs will consume nearly half of all state spending.
Figure 2: Share of General Fund Spending by Category, 2026 Fiscal Year
According to data from the US Census Bureau, in 2022, Minnesota spent $40,000 on public welfare per person in poverty, ranking second-highest in the entire country. In the same year, Minnesota spent $53,000 on Medicaid per enrollee for people with disabilities. This is the highest recorded spending among all the states and is over $15,00 higher than what the number two state — New York — spent in the same year.
Figure 3: Welfare spending per person in poverty
Minnesota’s overly generous welfare system is already hard to defend, given the large and growing burden it places on taxpayers. Rampant fraud only makes it worse — a slap in the face to Minnesotans who work hard, pay taxes, and believe in helping their neighbors.
What’s more, fraud drains resources from the very people these programs are meant to serve.