More Bad News for Minnesota’s Taxes

Date: February 02, 2016

People in the state are paying some of the highest taxes in the country.

More Bad News for Minnesota’s Taxes

While state and local taxes as a share of state income decreased on average across the U.S. during the 2012 fiscal year, that didn’t necessarily mean good news to people paying taxes in Minnesota, according to new Tax Foundation research.

The state’s tax burden, which is the amount of the total state income that goes to state and local taxes, was 10.8 percent—good for the eighth worst rate in the country.  

For context, here’s a breakdown of the best states:

  • South Dakota (7.1 percent)
  • Wyoming (7.1)
  • Alaska (6.5)

… and the worst:

  • New Jersey (12.2)
  • Connecticut (12.6)
  • New York (12.7 percent)

Part of the reason?

“An interesting observation is that many of the least-burdened states forego a major tax,” the report said. “For example, Alaska (50th), Nevada (43rd), South Dakota (49th), Texas (46th), and Wyoming (48th) all do without a tax on wage income.” Other lack of taxes that help states’ rankings: include no corporate taxes like Nevada, South Dakota and Wyoming or no sales tax like Alaska.

However, as the report points out, these correlations don’t “answer the causal question of whether levying fewer types of taxes leads to lower tax burdens or whether a political demand for lower taxes leads to fewer types of taxes being levied. Also worth considering is the possibility that opting to not levy a personal income tax causes a state to rely more on other forms of taxation that might be more exportable.”

For more on Minnesota’s notorious tax structure, check out:

Related Content: Small Business News | Economy | Minnesota | Taxes

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