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Location: Blogs Dan's Blog |
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| Posted by: Dan McGrath |
5/7/2008 |
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Between Federal and state taxes, Minnesota corporations are taxed at a staggering rate of 41.1% according to the Tax Foundation. This rate sets Minnesota corporations as the 3rd highest taxed in the world. Iowa and Pennsylvania hold the dubious distinction of being the only two places on Earth with higher corporate income taxes than Minnesota.
For comparison, Japanese corporations are taxed 39.5%, German corporations pay 38.9% and Canadian corporations pay 36.1%.
Just looking at state income taxes, most US states collect higher corporate rates than their peers abroad, but a national comparison of state corporate tax rates sets Minnesota 6th highest in the country at 9.8%.
A study produced by the American Legislative Exchange Council (ALEC) titled “Rich States, Poor States” ranked Minnesota 35th in national economic outlook and estimates an average of 5,242 residents migrate out of the state each year. The trend of negative population growth has been steady since 2002. By contrast, neighboring South Dakota, which has no state corporate income tax, is ranked 3rd in the nation in economic outlook and has seen steady population growth for the last five years.
Businesses are leaving Minnesota too. Northwest is one of the state’s largest employers. With the pending Northwest-Delta merger, state legislators asked Delta officials what kind of deal they could swing to keep the headquarters in Minnesota. Delta officials told legislators that nothing could keep the headquarters here. Perhaps that is because Georgia (where Delta is headquartered) has the 8th best economic outlook, nationally and has a top corporate income tax rate of 6% as opposed to Minnesota’s 9.8%.
Despite the obvious negative impact high taxes have on Minnesota’s economy, and the state’s already high tax burden, the legislature has been on a tear to raise taxes. The recent override of the governor’s transportation tax veto raised the gas tax when fuel prices are already at an all time high and will snag $6.6 billion dollars in new tax revenue over the next ten years. The omnibus tax bill just passed by the House will raise property taxes for 69% of Minnesota homeowners and slash corporate tax breaks. Sales taxes have been boosted for most metro-area counties, new “wheelage” and vehicle excise taxes have been imposed already, and another sales tax increase will be on the ballot to fund “the arts and outdoors” this November. All this and more from just this one legislative session. Hang onto your wallets. The legislature is still in St. Paul for two more weeks.
Take action against high taxes: Sign the Tax Cut Petition now and send a message to your elected officials.
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Comments (3)
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Re: Minnesota’s Corporate Income Tax Burden 3rd Highest Worldwide |
By Mpls on
5/7/2008 |
| You are selfish people. You are self-dealing whiners. |
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Re: Minnesota’s Corporate Income Tax Burden 3rd Highest in the World |
By Barb on
5/9/2008 |
Minnesota's New Motto (thanks to the mn government of ignorance):
DIVIDED WE STAND- UNITED WE'LL FALL. If it were the way we all knew it to be this state wouldn't have so many employed citizens qualified to remain dependent on everybody else's money while what they earn is pocket change!
We'd appreciate all INDEPENDENTLY RUN (no government subsidies) businesses to advertise your business as such...sign in the window, ETC. It is your independence we respect, it is your integrity we look up to, it is your dignity we appreciate, it is you we will do business with! We will continue to fight for the freedoms and human abilities the government continues to steal. Thank you for your strength and endurance. Thank you for standing for what the majority of America used to. |
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Re: Minnesota’s Corporate Income Tax Burden 3rd Highest in the World |
By dan.mcgrath on
5/12/2008 |
A reader sent me an email looking for clarification on the tax rates. He figured that for Minnesota to have the 3rd highest overall corporate tax rate in the world, we must also have the third highest top corporate tax rate in the USA, but my article says Minnesota's the 6th highest in state corporate tax rates. I can see how this can be confusing. They never make taxes simple, do they?
The answers lie in the way taxes are applied to corporations in different states, progressivity of tax rates and their deducibility rules. Minnesota collects a flat tax of 9.8%, while some other states use a progressive scale. States with a higher top tax rate may have a lower average rate, because smaller corporations are taxed at a lower rate. Some states allow federal taxes to be deducted as a business expense, some don't, and some allow a percentage to be deducted. So, although Minnesota has only the 6th highest top corporate income tax rate, the average taxes collected are the third highest per corporate dollar earned because of the way the rates and rules are applied. To make it even more confusing, some states tax profits, and others tax gross receipts, which makes it really interesting to try to compare tax rates.
Here are some additional resources to shed some light on the subject:
http://www.taxadmin.org/fta/rate/corp_inc.html
http://www.taxfoundation.org/publications/show/22917.html
http://www.oecd.org/dataoecd/26/56/33717459.xls |
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