In Fiscal Year (FY) 2016, Minnesota collected $33.5 billion in state and local taxes—or $6,055 for every man, woman, and child. 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?
To better answer this question, this analysis will calculate Minnesota’s tax burden relative to the private sector. Ultimately, it is the private sector that creates new wealth and income. A high tax burden means a state is hobbling its private sector relative to other states and reducing their long-run economic growth potential.
Unfortunately for taxpayers, as shown in Chart 1, Minnesota’s state and local tax burden (tax collections divided by private sector personal income) was the eleventh highest in the nation for FY 2016 at 15.9 percent—or 11 percent above the national average of 14.3 percent.
#Minnesota state and local #taxburden in FY 2016 was the 11th highest in the nation at 15.9%— 11% above US average of 14.3% http://bit.ly/2FX9C8F @keypolicydata #MNpol #MNleg #MNsen #MNgov #PolicyData (click to tweet)
As shown in Chart 2, Minnesota’s tax burden has increased over time by 54 percent to 15.9 percent in FY 2016 from 10.3 percent in FY 1950.
As shown in Chart 3, Minnesota’s 15.8 percent tax burden is greater than these combined industries: healthcare and social assistance (13.2 percent), arts, entertainment, and recreation (1.0 percent), and utilities (0.9 percent)
#Minnesota state and local #taxburden > combined industries: healthcare, arts/entertainment, and utilities http://bit.ly/2FX9C8F @keypolicydata #MNpol #MNleg #MNsen #MNgov #PolicyData (click to tweet)
Minnesota’s higher than average state and local tax burden is driven by a significant individual income tax burden (5.1 percent, 6th highest), corporate income tax burden (0.7 percent, 8th highest), and all other taxes burden (2.6 percent, 18th highest) which more than offsets the other lower taxes such as the property tax burden (4.0 percent, 27th highest), and sales tax burden (2.7 percent, 36th highest).
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in Minnesota—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
The 20 Minnesota counties with the highest local government tax burden include:
The 20 Minnesota counties with the lowest local government tax burden include:
Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 66 years! See if your state has been above or below the national average?
Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.