The 10 Minnesota Counties That Are Losing the Most Money

Date: September 29, 2015

New report highlights the counties that are doing the best and worst in the state.

Minnesota is cold, sure, but its tax climate is downright frigid. A recent report suggests unfavorable rates could be to blame for the state’s $5.49 billion loss in annual adjusted gross income (AGI) between 1992 and 2013, leaving 53 counties losing millions—some even billions.

The findings are collated in a map called “How Money Walks,” which illustrates how wealth moved across state and county lines from 1992 to 2013. Minnesota placed No. 11 on the list of top-losing states. Data from the U.S. Census Bureau and the Internal Revenue Service show more than 60 percent of Minnesota’s 87 counties in the red, indicating that a lot of wealth—and the people and businesses responsible for it—skipped town.

Where did the money go? Well, as a whole, Minnesota lost $2.37 billion to Florida and $449.43 million to Texas—both states without a personal or corporate income tax. It also lost $1.12 billion to Arizona and $363.91 to Colorado, where the highest personal income tax rates are less than half of Minnesota’s.

At the county level, Scott, Washington, Wright, Carver and Sherburne all attracted well over $500 million in wealth over that 21-year time period—Washington and Scott gained a whopping $1.15 billion and $1.39 billion, respectively. Hennepin and Ramsey, on the other hand, lost more than $10 billion combined.

“For the average person who has wealth, Minnesota is way out of sync,” says NFIB State Director Mike Hickey. “Income tax, capital gains tax and estate tax—those are the big three. Florida has none of them, so for someone who has wealth, that’s big.”

Not all of the lost wealth left the state. Hennepin, which took the greatest blow in Minnesota at $6.5 billion in annual AGI lost, saw most of its wealth go to nearby Scott, Anoka, Wright and Carver counties. Ramsey, too, saw most of its $3.59 billion loss go to the suburbs.

“People are moving out of Minneapolis and St. Paul for all the typical reasons: bad schools, higher property taxes and safety concerns,” Hickey explains. “Moving out of the state, it’s because of bad weather which can’t be prevented and a bad tax climate—especially with our estate tax which can be addressed”

Under current law, Minnesotans who leave more than $1.4 million per person in personal assets at death will owe an estate tax, which Hickey deems “way out of conformity with the federal exemption” of $5.43 million. Minnesota is phasing into a $2 million per person exemption in 2018 but it still comes up way short. Combined with the fourth-highest personal income tax in the country, Minnesota’s tax rates are leaving its small business climate out to dry.

Counties Losing the Most Wealth in Minnesota:

1.            Hennepin (-$6.5 billion)
2.            Ramsey (-$3.59 billion)
3.            Olmsted (-$302.41 million)
4.            Dakota (-$262.51 million)
5.            Stearns (-$173.08 million)
6.            St. Louis (-$168.52 million)
7.            Mower (-$145.69 million)
8.            Lyon (-$140.8 million)
9.            Winona (-$122.52 million)
10.           Blue Earth (-$119.3 million)

Related Content: Small Business News | Minnesota

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