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

Minnesota House and income tax

Posted by: Lori Sturdevant under Budget opinion Updated: April 15, 2013 - 4:34 PM

The income tax rate that House DFLers chose for their proposed new top income tax bracket isn't exactly a nice round number. It's 8.49 percent, Speaker Paul Thissen announced Monday, and would fall on that portion of taxable incomes exceeding $400,000 for married joint filers and $226,000 for singles.

That rate is awfully close to 8.5 percent. But a measly 0.01 percent difference evidently matters to the politicians who picked it -- for two reasons, I'd guess.

One is that with a 8.49 percent rate, they can claim with a straight face that the state's top rate is below its level in the 1990s. Minnesota cut its 8.5 percent top rate to 8.0 percent in 1999 and 7.85 percent in 2000, as the state's economy perched precariously atop the dot.com bubble.

More significant may have been Thissen's comment that at 8.49 percent, Minnesota's top rate would be "out of the top 10 in the country." He could have added "just barely." According to the House Research Department, 10 states and the District of Columbia have combined top state and local income tax plus surtax rates higher than 8.49 percent. If Minnesota follows the House DFL lead, its top rate would be No. 11, just below the dreaded top 10. 

But not right away. The House's proposal also includes a temporary surtax, and it's a big one -- 4 percent, for that portion of taxable incomes exceeding $500,000 for married joint filers. The proposed surtax would automatically expire after two years -- but while in force, it would give Minnesota a steep top rate of 12.49 percent, behind only California and New York.

My guess is that in the 2014 election, it's the number three -- as in third-highest in the nation -- that voters will hear about from GOP candidates and their business allies. Three is easier to remember than 8.49 or 11.

 

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