Lori Sturdevant, an editorial writer and columnist, has covered state government and politics for more than 30 years.

Minnesota's middling business tax burden

Posted by: Lori Sturdevant Updated: January 25, 2013 - 3:25 PM

Complaints about Gov. Mark Dayton's proposal to apply the state sales tax to previously untaxed business services sent me hunting for the latest iteration of the annual Ernst & Young/Council on State Taxation comparison of the taxes state and local governments load on businesses.

That analysis, released last July, shows that Minnesota's total business burden in fiscal 2011 was on the lighter side, as it was in previous years. Thirteen of the other 49 states have a lower total effective business tax rate than Minnesota's 4.5 percent. Those 13 are literally all over the map, from Oregon and Utah to Connecticut and Delaware. 

I appreciate the Ernst & Young study because unlike many other comparisons, this one looks at total state and local business taxes, including unemployment insurance premiums, as a percentage of total state economic activity. That gives Minnesota the credit it's due for a comparatively low unemployment rate, which translates into lower costs for employers.

The Ernst & Young study is also a handy rundown of what Minnesota's competition is doing to keep businesses satisfied. Overall, states raised business taxes 4.5 percent in fiscal 2011. But they reduced the property tax load by 1.5 percent. Dayton's proposals to tax businesses more but freeze the statewide business property tax for the next two years are consistent with that pattern.  

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