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State –Local Tax Mix: Minnesota v. U.S. • Relatively less reliance on property tax • 29 percent vs. 33 percent • Relatively less reliance on general sales taxes • 19 percent vs. 23 percent • Relatively greater reliance on personal income taxes • 29 percent vs. 21 percent
State-Local Tax Mix: Minnesota vs. Great Lake States • Relatively less reliance on property taxes • 30 percent vs. roughly 40 percent in Illinois, Michigan and Wisconsin; Minnesota has least reliance in the region • Relatively less reliance on general sales taxes • 19 percent vs. 25 percent in Indiana, Iowa, and Michigan; Wisconsin and Illinois about equal to Minnesota • Relatively greater reliance on personal income taxes • 29 percent vs. 17 percent in Illinois and Michigan; Minnesota is highest with Indiana, Iowa and Wisconsin at about 25 percent
Minnesota vs. U.S. • State taxes only – Compared to the U.S. • Sales tax reliance – 26 percent vs. 31 percent • Personal income tax reliance 40 percent vs. 35 percent • Local taxes only – Compared to the U.S. • Property tax reliance – 93 percent vs. 74 percent • Sales tax reliance – 2 percent vs. 11 percent • State taxes only – Compared to the Great Lakes • Property taxes – 4 percent; only Michigan also has state property tax • General sales tax – 25 percent is lowest in the region; 40 percent in Indiana and Michigan • Personal income taxes – 41 percent (highest along with Wisconsin) • Local taxes – Compared to the Great Lakes • Minnesota is the highest; Illinois, Iowa and Wisconsin share sales
Tax Burdens: 1977 – 2009 [Taxes as Percent of Personal Income] • State – Local Taxes • 1977 – 2002 – Minnesota generally exceeds U.S. average and other states in the region (except Wisconsin) by considerable margin • 2005 – 2009 – Minnesota runs steady at about 10.8 percent of personal income; effectively equal to U.S. average and near the middle of Great Lakes States • State Taxes Only • Minnesota at roughly 8.0 percent of personal income consistently above U.S. average (6.0 percent) and at highest among states in the region
Structural Characteristics • Corporate Income Tax • Tax rate is relatively higher: 9.8 percent vs. 6.0 – 8.0 percent (roughly) • Personal Income Tax • Tax rate is generally higher 7.5+ percent (equivalent to Wisconsin), compared to flat rates in Indiana and Illinois. Phase-out of exemptions and deductions has substantial effect • General Sales Tax • Rate is near the upper end of the region • Base with food and clothing exempt is relatively more narrow • Tax relatively large number of services – most of which are classified as services • Likely tax manufacturing equipment and utilities a bit more as well as other business inputs
State-Local Tax Mix: Minnesota and U.S.Percentage Distribution of State and Local Taxes -- 2009 Source: Bureau of the Census
State – Local Tax Mix: Upper MidwestPercentage Distribution of State and Local Taxes in Selected States – 2009 Source: Bureau of the Census
State Tax Mix: U.S. and MinnesotaPercentage Distribution of State Taxes -- 2009 Source: Bureau of the Census
Local Tax Mix: U.S. and MinnesotaPercentage Distribution of Local Taxes – 2009 Minnesota Source: Bureau of the Census
State Tax Mix: Upper MidwestPercentage Distribution of State Taxes in Selected States – 2009 Source: Bureau of the Census
State-Local Tax Burden Over TimeState-Local Taxes as Percent of Personal Income – Various Years Source: Bureau of the Census
State Tax Burden Over TimeStateTaxes as Percent of Personal Income – Various Years Source: Bureau of the Census
Corporate Income Tax Features Source RIA Checkpoint
Personal Income Tax Characteristics Source: RIA Checkpoint