Conservative Group Faults Minnesota Tax Law

A conservative group says Minnesota’s taxes are the 46th most competitive in the country.

The Tax Foundation reported on Wednesday, Sept. 28, that when considering corporate, individual income, sales, property and unemployment insurance taxes, Minnesota finished near the last. Only Vermont, Washington, D.C., California, New York and New Jersey have worse business tax climates, the foundation reported.

“Our goal with the State Business Tax Climate Index is to start a conversation between taxpayers and policymakers about how their states fare against the rest of the country,” Tax Foundation policy analyst Jared Walczak said. “While there are many ways to show how much a state collects in taxes, the index is designed to show how well states structure their tax systems, and to provide a roadmap for improvement.”

Minnesota Republicans use reports like the foundation’s to argue for lowering business taxes. Democrats, like Gov. Mark Dayton, say other factors also are important to businesses.

“The Tax Foundation has an anti-tax ideology and views lower taxes as desirable,” Dayton spokesman Sam Fettig said. “For the past two years, Minnesota has ranked in the top five best states for business by CNBC, due to our highly educated workforce, investments in infrastructure and high quality of life with a lower cost of living, none of which the Tax Foundation factors into its rankings.”

The foundation’s Scott Drenkard said that since federal tax law has changed little in recent years, state governments need to change their tax policies “to boost their national and global competitiveness.”

The foundation said that in its report “states are penalized for overly complex, burdensome and economically harmful tax codes and rewarded for transparent and neutral tax codes that do not distort business decisions.”

Most of the top states have fewer, and lower, taxes. The top five in the foundation’s report are Wyoming, South Dakota, Alaska, Florida and Nevada. South Dakota was the only Minnesota neighbor to be near the top or bottom of the rankings. Border states North Dakota, Wisconsin and Iowa ranked 29, 39 and 40, respectively, in the annual report.