In Fiscal Year (FY) 2011, Minnesota collected $26.8 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average Minnesota taxpayer can afford this level of taxation.
As shown in the charts below, Minnesota’s state and local tax burden (tax collections divided by personal income) was the eighth highest in the nation for FY 2011 at 11.5 percent—or 9.7 percent above the national average of 10.5 percent. Remarkably, despite having a high tax burden it grown fairly slowly over time by 28.9 percent to 11.5 percent in FY 2011 from 8.9 percent in FY 1950.
Minnesota’s high tax burden is driven by a very high individual income tax burden (3.2 percent, 6th highest) and a high corporate income tax burden (0.43 percent, 12th highest). Of course, Minnesota’s high tax burden for these two taxes is driven by high marginal statutory tax rates with the 2013 top individual income tax rate at 7.85 percent (10th highest) and the top corporate income tax rate at 9.8 percent (4th highest).
J. Scott Moody has over 18 years as a public policy economist with a specialty in tax policy and has over 180 publications. He has worked for numerous national and state-based think tanks such as Federalism In Action, Tax Foundation, Heritage Foundation, and The Maine Heritage Policy Center.