Center on Budget and Policy Priorities, State Income Tax Burdens on Low-Income Families in 2000
Minnesota's Income Tax System Praised: Legislaure Shouldn't Lose Sign of the Big Picture (2000)
Minnesota Leaders Mustn't Rest on Laurels in Response to National Study Praising Income Tax Treatment of Poor (1998)
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ABOUT USThe Minnesota Budget Project is an initiative of the Minnesota Council of Nonprofits.
Minnesota’s Income Taxes Among Most Fair to Working FamiliesMinnesota has consistently been one of the nation’s leaders in ensuring that the state does not tax struggling families further into poverty. A new report by the Center on Budget and Policy Priorities shows that, among 42 states with income taxes, Minnesota has the lowest or second-lowest income tax burden on families in poverty, families with minimum-wage earnings, and families with incomes at 125% of the poverty line. A low income tax burden does not mean that low-income families are not paying their fair share. Minnesotans at all income levels pay about the same percentage of income in total state and local taxes. In Minnesota, a progressive income tax system and refundable credits, balances regressive sales and property taxes, which take a higher percentage of income from low-income families than from upper-income households. “Minnesota should be proud to have one of fairest state tax systems,” said Nan Madden, Director of the Minnesota Budget Project. “This did not happen by accident. Legislators and the Ventura administration must be careful this session not to undo past efforts to bring about tax fairness.” Over the past several legislative sessions, policy-makers of all parties have recognized that the way Minnesotans pay their taxes varies with income, and therefore a combination of approaches is necessary to ensure tax fairness. Since income tax rate reductions largely leave out struggling families, an increase in the Working Family Credit has accompanied rate reductions in past tax bills. Similarly, Governor Ventura proposes a significant increase in the Working Family Credit to offset increases in the regressive sales tax and as a companion to income tax rate reductions. A missing piece so far in the Governor’s tax plan is in the property tax area. Although the Governor’s plan would reduce property taxes for all classes of property and increases targeted property tax relief for low- and middle-income homeowners, there is no tax cut for renters. “An increase to the Renter’s Credit should be part of a balanced tax relief plan,” said Madden. Updated March 1, 2001 |
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