Minnesota Income Tax Increase Modification Could Encourage Tax Avoidance and Promote Poor Investment Decisions
Minnesota is one of 46 states that begin their fiscal year on July 1. However, it is the only state that may endure a government shutdown, due to a tax policy impasse between Governor Mark Dayton (DFL) and the legislature.
In his two-year $36 billion general fund budget plan, Dayton proposed to create a new top marginal rate of 10.95% for those making over $85,000 in income, with a temporary three-year additional surcharge of 3% on income over $500,000 (see Table 1). Those states that have adopted such "millionaires'" taxes on high-income earners in recent years have mostly let them expire; only Minnesota at the present time is actively considering adopting such a tax.