Washington County's wealthiest could feel tax pinch

  • Article by: JIM ANDERSON , Star Tribune
  • Updated: March 30, 2013 - 10:50 PM

A plan to raise income tax rates on the state’s richest residents would affect nearly 3,000 in Washington County.

Washington County is among the most affluent in Minnesota and as such, proposals by Gov. Mark Dayton and House DFLers to increase taxes on the uppermost reaches of the upper crust hit home.

In fact, Washington County is among four counties — the others are Hennepin, Carver and Olmsted — whose residents would most feel of the effects of the “fourth tier” income tax being debated in the Legislature, according to an analysis by Minnesota 2020, a progressive think tank.

The data show that 2,858 Washington County taxpayers would be affected by the governor’s plan to increase the marginal tax rate from 7.85 percent to 9.85 percent on the wealthiest 2 percent of the state’s taxpayers — those married couples earning more than $250,000 annually, heads of household earning more than $200,000 and single filers who make more than $100,000.

That number ranks fourth in terms of concentration among the state’s 87 counties, representing 2.61 percent of full-year resident taxpayers, third among the counties. Carver County, at 3.36 percent, has the highest concentration of wealthiest taxpayers. For most other counties — 52 of them — less than 1 percent of taxpayers are affected by the proposal, the analysis shows.

A breakdown of annual median income (the income at which half the population make more, half less) in Washington County’s 31 cities and townships finds that just four communities — Bayport, Newport, Oak Park Heights and Landfall — were at less than the state’s median of $58,476.

In 10 communities at the other end of the wealth scale, the median income figure topped $100,000 — led by Dellwood with a median of $145,000, nearly 2½ times the state median.

As a whole, the county’s median income was $79,571.

House DFLers also have proposed a temporary surcharge on top of the governor’s proposal for those earning more than $500,000. It’s not clear how many Washington County taxpayers would be affected by that plan should it be approved.

The governor campaigned on increasing income tax rates for the wealthy, and a similar proposal was defeated in 2011, when Republicans controlled the Legislature. The debate this year is the same, with a key difference: DFLers hold the majority.

Dayton has argued that the wealthiest Minnesotans are not paying their fair share of income taxes, and Jeff Van Wychen, director of tax analysis at Minnesota 2020, said the data bear that out.

The top 2 percent of households pay 20 percent less of their income per dollar in state and local taxes (of all forms) than “middle-class” taxpayers, which it defines as the middle 20 percent, the data show.

The governor’s plan is intended to correct that and provide the money needed to pay for such things as public schools and public safety.

The wealthiest 2 percent, Van Wychen asserts, also benefit most from those public services in terms of things like having a well-educated workforce and safe communities.

“I would argue that just as the wealthy benefit in proportion to their income, so they should pay taxes in proportion to their income,” he said.

But that populist sentiment also hides the fact that in that 2 percent are thousands of small-business owners whose incomes are tied to their businesses and would be unfairly hurt by the plan, said Laura Bordelon, senior vice president for advocacy for the Minnesota Chamber of Commerce.

“It becomes a very uncompetitive position for Minnesota businesses,” she said.

Minnesota would rise to among the top tax rates in the nation, and that’s why the chamber rigorously opposes the plan, as does the Taxpayers League of Minnesota.

  • Washington County wealth

    The median household income — half the households make more than the amount and half make less — for Washington County communities from 2007 to 2011, the most recent data available from the U.S. Census Bureau:

    Dellwood $145,000

    West Lakeland Township $129,167

    Denmark Township $111,528

    Stillwater Township $107,396

    Grant $107,135

    Baytown Township $106,563

    Lake Elmo $105,739

    Pine Springs $105,625

    Marine on St. Croix $101,250

    Afton $100,926

    Mahtomedi $94,659

    Woodbury $92,780

    May Township $89,036

    Birchwood $87,569

    Lakeland Shores $86,250

    Lakeland $86,042

    Cottage Grove $82,469

    Scandia $81,161

    County median $79,571

    Hugo $78,406

    St. Mary’s Point $71,042

    Stillwater $70,131

    Grey Cloud Island Township $69,375

    Oakdale $66,971

    Forest Lake $65,983

    Lake St. Croix Beach $61,250

    St. Paul Park $60,795

    Willernie $60,750

    State median $58,476

    Bayport $57,852

    Newport $53,089

    Oak Park Heights $44,946

    Landfall $31,429

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