Policy Documents

Minnesota Income Tax Increase Modification Could Encourage Tax Avoidance and Promote Poor Investment Decisions

David S. Logan, William McBride and Joseph Henchman –
June 29, 2011

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.