Feeding Our Future: 1229 East Lake St.
The numbers behind the Feeding Our Future scandal are staggering: up to $500 million of taxpayer money lost, more than 250 suspects, 70 individuals indicted to date, etc. To put…
A lot of states nationwide are facing budget surpluses. To a large extent, this is due to federal efforts during the pandemic. However, the sizes of those surpluses vary. And as the Star Tribune reports, Minnesota’s surplus is especially high compared to its neighbors.
Stronger than expected economic growth and a deluge of federal cash have boosted state budgets nationwide. But in that sea of surpluses, Minnesota appears to stand out from its neighbors.
State budget officials estimated Monday that Minnesota will have a historic $9.3 billion surplus, equal to nearly 18% of its two-year budget of $52 billion. While every state budgets differently, the forecasted sum looks larger than those of most other Midwestern states.
Why is this so? The main culprit is our punitive tax system.
“It’s hard to compare snapshots,” Management and Budget Commissioner Jim Schowalter said, but even so, “Minnesota is likely to outperform some of our neighboring states simply because of our tax system. Our decisionmakers have put together a balanced system that weathered the pandemic really well.”
This is something that the State Economist touched on last November when she presented what was then forecasted to be a $7.7 billion surplus. According to Laura Kalambokidikis, Minnesota has a “tax revenue system that [is] well situated to capture tax receipts from the extraordinary growth.”
In other words, a heavily progressive individual income tax system coupled with extraordinarily high rates are a big contributing factor to the size of the surplus.
While some legislators have tried to attribute our high surplus to high corporate profits, the fact of the matter is that the majority of the surplus comes from individual income tax revenue.
But even if the surplus was due to corporate tax revenue, it would still come from Minnesotans. As research has shown, the majority of the tax burden imposed on corporations ultimately falls on consumers and workers through lower wages or higher prices.
The bottom line is that the Minnesota government is poised to collect more money than it needs. And the big reason for that is our punitive tax system.
The state needs to give that money back to hardworking Minnesotans, as numerous other states have done with their surpluses. Minnesotans deserve permanent tax relief, especially considering our state’s lagging economic performance.
Tell Gov. Walz and your legislators to give the surplus back to Minnesotans!
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