The Tax Foundation lays out Minnesota’s high taxes and their consequences
The Tax Foundation has a new short paper out on Minnesota’s taxes. Its key findings are
After the recessions in 2001 and 2007–2009, Minnesota’s job growth has trailed the national average, suggesting Minnesota’s economy may not be as strong as it once was.
Since the early 2000s, Minnesota has seen more than 76,000 people leave the state on net, with net out-migration occurring every year since 2002.
Minnesota has the fourth highest top marginal individual income tax rate in the country at 9.85 percent.
Minnesota imposes the third highest corporate income tax rate in the country at 9.8 percent, behind only Iowa and Pennsylvania’s (12 and 9.99 percent rates, respectively).
Minnesota’s corporate income tax revenue has varied by as much as 42 percent year-over-year, making it difficult to properly budget when revenues are unpredictable.
On average, states have six classifications for their property tax structure. Minnesota is an extreme outlier with 52 property tax classifications, resulting in immense complexity. South Dakota has the second most nationally with 14.
Minnesota legislators have yet to act to bring Minnesota up to date with new federal tax law provisions, which will create headaches if put off much longer. Without a conformity bill, Minnesota taxpayers can’t rely on consistent definitions between their state and federal income tax returns, and businesses will essentially be forced to keep two sets of books.
To anyone who has been following our work on Minnesota’s economy, these findings will come as no surprise. Taxes are too high in our state. In the forthcoming edition of our magazine, Thinking Minnesota, we set out some proposals for getting Minnesota’s taxes back to a competitive level. The Tax Foundation’s short paper is another good primer on why we need to do this.
John Phelan is an economist at the Center of the American Experiment.