 | A statement on the 2009 Minnesota Tax Incidence Study
3/9/2009 5:56 PMThe 2009 Minnesota Tax Incidence Study, released today, March 9, by the Minnesota Revenue Department, provides further evidence of a tax system that is growing more regressive and less fair, and that also is producing less revenue as a percentage of income.
The highly respected biennial report, which shows how state and local taxes impact Minnesotans by income level, provides a compelling argument for raising revenue from high-income earners to balance the state’s $6.2 billion projected budget shortfall ($4.5 billion when federal recovery act dollars are applied).
The Tax Incidence Study shows that between 2004 and 2006, the effective tax rate increased on average for households below the middle income levels (those making less than $40,000), while the effective tax rate decreased for those above the median income, and decreased most near the top.
For households in the top 10th of incomes (those making more than $124,000) the total effective tax rate dropped from 10.9 percent to 10.0 percent and for households toward the bottom (those in the second lowest tenth making between $10,000 and $15,000), the effective tax rate increased from 11.3 percent to 12.5 percent. For those at the very top 1 percent (those earning more than $447,000), the effective rate was the lowest of all and dropped from 9.6 to 8.9 percent between 2004 and 2006.
The Tax Incidence Study projects that regressivity will grow worse by 2011, with those in middle incomes paying a larger percentage and those in upper incomes paying about the same or a slightly smaller percentage.
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