Minnesota’s Corporate Income Tax Burden 3rd Highest In The World PDF Print E-mail
Written by Dan McGrath   
Wednesday, 07 May 2008 16:37

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 beginning in 2003.

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.

Read more about the ALEC study at Finance and Commerce.

Cross-posted at Minnesota Majority. Comments welcome.