Minnesota’s Economic News — W/E 12/3/21
Economic growth Fox 9: Inflation eats up most of Minnesota workers’ wage gains Grand Rapids Herald Review: Minnesota ranked 48th in economic freedom index, last in Midwest Star Tribune: Minnesota’s…
An Associated Press report, “D.C. sends in the bacon,” marveled that residents of the District of Columbia paid a whopping $37,000 per capita in federal taxes, far outpacing all fifty states. The explanation? There are very wealthy people and high profit businesses in the District, with many of them presumably feeding out of the federal contracts and lobbying trough.
So how does Minnesota rank among the states? According to 2016 IRS data, we pay the second highest amount, $14,624 per capita, after Delaware’s $16,322 (the figures include corporate income taxes, a reason Minnesota ranks at the top).
The next highest states? Minnesota beat out the likes of Massachusetts, Connecticut, New York, Illinois, Ohio, Maryland, Rhode Island, Washington, Nebraska, California, and Pennsylvania.
By comparison, the national average per capita amount is $8,943.
But what about the other side of this coin? How much do D.C. and the states get back (after the money has been processed through that massive federal holding pen)? In other words, how much “pork” do Congressional delegations wrangle back ?
Again, D.C. leads the pack but not in a good way. According to a study done by the New York Comptroller, for every $1 dollar sent in, the District of Columbia gets back–wait, wait– an amazing $4. Wow, how do you spell “oink?”
The explanation? D.C. residents are big consumers at the other federal trough: entitlements like food stamps, Social Security, SSI disability, Medicaid, Medicare and Social Security.
What about Minnesota? Unfortunately, the New York report only said Minnesota ranked 47th in 2013 for return on the dollar. But we called them and they put us at $0.86. But according to the Mises Institute, in 2016, Minnesota ranked 48th at $0.52 on the dollar. Whatever the real number is, as Mises says, “Minnesota pays in by far more than it receives back.”
We do not have any military bases or many federal installations but still, let’s not turn this into a virtue, or worse, invite the feds here. But we get should get some big bucks back here to build and fix roads. This seems like a good topic for 2018.
You might as well hear all the bad news at once, so here is more of the same:
According to the Minnesota Center for Fiscal Excellence, “Minnesota has the most progressive income tax system in the nation.” It’s not just Minnesota; our federal tax code overall remains very progressive. That means, contrary to what the Left claims, people who do not make much money are not paying much in taxes, and may even get paid under the earned income tax credit.
Here is the top line summary from the Tax Foundation on federal taxes for 2016 (you can read the full report here).
High-Income Americans Paid the Majority of Federal Taxes
In 2014, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $543 billion, or 39.48 percent of all income taxes, while the bottom 90 percent paid $400 billion, or 29.12 percent of all income taxes.
High-Income Taxpayers Pay the Highest Average Tax Rates
The top 1 percent of taxpayers (AGI of $465,626 and above) paid the highest effective income tax rate, at 27.2 percent, 7.9 times the rate faced by the bottom 50 percent of taxpayers.
Just the proof you needed that it is not hip to be Progressive.
JOHN HINDERAKER ADDS: I assume one reason residents of the District pay a lot of federal taxes is that they don’t have any other levels of government. What would be state and local taxes anywhere else are federal taxes in D.C.