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Minnesota's Tax Fairness Retreat: A 50-State Study

Minnesota's Tax Fairness Retreat: A 50-State Study

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Published by Minnesota 2020

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Published by: Minnesota 2020 on Jan 07, 2011
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Minnesota 2020 - www.mn2020.org
Table of ConTenTs
Executive Summary                                     3
Findings.................................................6Policy.Options..............................................7I.Introduction..............................................8II.Total.State.and.Local.Tax.Systems................................14III.Income.Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20IV.Consumption.Taxes........................................24V.Property.Taxes...........................................28
VI Conclusion                                            34
 
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Minnesota 2020 - www.mn2020.org
exeCuTive summary
In.nearly.every.state,.including.Minnesota,.state.and.local.taxes.are.regressive,.which.means.that.low.and.moderate.income.families.shoulder.a.disproportionate.share.of.the.tax.load.Furthermore,.state.and.local.taxes.have.become.more.regressive.since.2000.Unfortunately,.the.movement.toward.greater.tax.regressivity.has.proceeded.more.rapidly.in.Minnesota.than.in.most.other.statesA.greater.dependence.on.property.taxes.—.which.are.regressive.—.and.decreased.dependence.on.income.taxes.—.which.are.progressive.—.are.major.forces.pushing.Minnesota.toward.becoming.a.more.regressive.tax.state.One.of.the.main.reasons.for.this.shift.is.“no.new.taxes”.state.policy,.which.led.to.reductions.in.state.revenue.sharing.with.local.governments,.thereby.forcing.property..tax.hikesThis.report.calculates.the.regressivity.and.progressivity.of.state.and.local.taxes.in.all.50.states.based.on.a.metric.called.the.“Suits.index”.A.Suits.index.with.a.value.between.0.and.+1.denotes.a.tax.system.that.is.progressive;.a.Suits.index.with.a.value.between.0.and.-1.denotes.a.system.that.is.regressive
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While.Minnesota’s.overall.tax.system.is.still.less.regressive.than.most.states,.it.is.slipping.more.aggressively,.relative.to.other.states,.toward.greater.regressivity.From.2000.to.2007,.Minnesota.dropped.from.the.11
th
.least.regressive.state.to.the.15
th
.least.regressive.In.addition,.Minnesota’s.Suits.index.fell.much.more.rapidly.than.the.national.average;.a.large.decline.in.the.Suits.index.denotes.a.large.increase.in.tax.regressivity.Minnesota.ranks.39
th
.in.terms.of.the.magnitude.of.decline.in.the.Suits.index.from.2000.to.2007,.which.means.that.only.11.other.states.moved.toward.increased.tax.regressivity.more.rapidly.than.Minnesota
1DataforSuitsindexcalculationswereobtainedfromthelasttwo“WhoPays?ADistributionalAnalysisoftheTaxSystemsinAll50States,”publishedbytheInstituteonTaxationandEconomicPolicy,whichcoveredtaxespaidin2000and2007.Themostrecent“WhoPays”reportisbasedon2007data,butincorporatespermanenttaxchangesmadethroughOctober2009.Theprevious“WhoPays”reportisbasedon2000data,butincorporatespermanenttaxchangesmadethrough2002.
Th ttw tt th pc p mtth  tth tt.

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