In Fiscal Year (FY) 2013, Minnesota collected $28.9 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 Chart 1, Minnesota’s state and local tax burden (tax collections divided by personal income) was the eleventh highest in the nation for FY 2013 at 11.3 percent—this is 9 percent above the national average of 10.3 percent. As shown in Chart 2, despite having a high tax burden it grown fairly slowly over time by 28 percent to 11.3 percent in FY 2013 from 8.8 percent in FY 1950.
Minnesota’s high tax burden is driven by a very high individual income tax burden (3.3 percent, 7th highest) and a high corporate income tax burden (0.53 percent, 7th 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).
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 Minnesota counties with the highest local government tax burden include: Cook County, MN (4.6 percent), Crow Wing County, MN (4.3 percent), and Sherburne County, MN (4.1 percent). The Minnesota counties with the lowest local government tax burden include: Koochiching County, MN (1.8 percent), Pennington County, MN (2 percent), and Marshall County, MN (2.1 percent).
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.