Tax-and-spend state? Taxpayer group says yes

  • Article by: MARY LYNN SMITH , Star Tribune
  • Updated: September 26, 2012 - 9:44 PM

Minnesota continues to rank among the top tier of states for taxing and spending, according to a report released by the Minnesota Taxpayers Association.

The report based on 2010 U.S. Census data likely will be used by lawmakers as they wrangle with who and how much to tax and where to spend money. The answers likely will depend on which side of the aisle the politicians sit.

Per capita, Minnesota ranks 13th among states for total state and local tax collections in fiscal year 2010. The above-average ranking is exactly where it was in 2009 and 2008.

In state and local government spending on per capita, Minnesota dropped from 13th place in 2009 to 15th in 2010. When you compare spending as a portion of income, Minnesota ranks 25th.

But these numbers don't tell the whole story, said Senate Minority Leader Tom Bakk, DFL-Cook. "You can make numbers say whatever you want," he said. Instead, he said, consider that about 20 Fortune 500 companies are located in Minnesota. "And 3M wouldn't be spending $150 million to build a new facility here if it was such a bad place to do business. ... South Dakota has no personal income tax, no corporate tax but zero Fortune 500 companies. If it's all about tax policy, why wouldn't South Dakota have at least one. ... But we have some perceptual problems and I don't know how you deal with it."

Rep. Matt Dean, R-Dellwood, however, said the problem is real.

"Competition for jobs between states is getting fiercer and fiercer. Minnesota is at a disadvantage when it comes to taxes and regulation," said the House Majority Leader.

Summarizing its 40-page report, the taxpayers group noted several highlights:

• Minnesota's state and local individual income tax collections were eighth highest on per capita and ninth as a portion of income.

• Minnesota is about in the middle for property tax collections: ranking 21st per capita and 26th as a portion of income.

• Minnesota dropped from 11th in 2009 to 13th place the next year in the national rankings for corporate taxes per capita.

• Minnesota continues to spend more than other states for public welfare and human services, ranking fifth.

"Historically, as far back as we have tracked this the last 40 years, Minnesota has routinely averaged 30 to 45 percent more in spending in health and human services," said Mark Haveman, Minnesota Taxpayers Association executive director. "That's been a priority of this state, and that's not to say there isn't plenty of evidence that we've gotten good returns on it."

But over the years, the spending in health and human services has begun to cut into other spending, Haveman said. "We need to think creatively about government redesign and reform programs that continue to deliver those services for less cost."

Bakk says its not just about the numbers; it's about the quality of life Minnesotans want and will pay for.

"A perfect example is the Legacy Amendment that was on the ballot in 2008 that raised the sales tax," he said. "That got more votes than Barack Obama. People voted for it because they want clean water. They want to clean up lakes and our rivers. That's a quality of life thing and Minnesotan's are willing to raise taxes to get it."

Mary Lynn Smith • 612-673-4788

WHERE WE RANK

Minnesota's place among other states in selected tax collections.

21

Property

8

Individual income

13

Corporate income

28

Sales

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