Minnesota

Low-wage workers often face a dual challenge as they struggle to make ends meet. In many instances, the wages they earn are insufficient to encourage additional hours of work or long-term attachment to the labor force. At the same time, most state and local tax systems impose greater responsibilities on poor families than on wealthy ones, making it even harder for low-wage workers to move above the poverty line and achieve meaningful economic security. The Earned Income Tax Credit (EITC) is designed to help low-wage workers meet both those challenges. This policy brief explains how the credit works at the…

State lawmakers seeking to enact residential property tax relief have two broad options: across-the-board tax cuts for taxpayers at all income levels, such as a homestead exemption or a tax cap, and targeted tax breaks that are given only to particular groups of low-income and middle-income taxpayers. One increasingly popular type of targeted property tax relief program is called a "circuit breaker" because it protects taxpayers from a property tax "overload" just like an electric circuit breaker: when a property tax bill exceeds a certain percentage of a taxpayer's income, the circuit breaker reduces property taxes in excess of this…

Even though there is little evidence that cutting taxes and reducing public investments actually spurs economic development, lawmakers across the country have been persuaded to give tax breaks to companies in hopes of encouraging a thriving economic climate in their state. Some lawmakers are wising up to the idea that subsidies don't work. But for policymakers who insist on offering incentives, there are some important, simple, and concrete steps that can be taken to ensure that subsidies aren't allowed to go unchecked. This policy brief offers guidance on best practices for alternatives to providing blanket tax breaks.

Everyone agrees that tax "fairness" is important--even though there is often disagreement on what fairness means. A well-informed debate on who should pay the most taxes must start by assessing who actually does pay the most--and the least. Too often taxes are studied only with an eye towards tax rates instead of an understanding of how taxes impact people depending on their income. Tax incidence analyses answer basic questions by measuring how taxpayers at different income levels are affected by the current tax system and various tax reform alternatives. This policy brief provides a basic introduction to using ITEP's tax…

Retail trade has been transformed by the emergence of the Internet. As the popularity of "e-commerce" (that is, transactions conducted over the Internet) has grown, policymakers have engaged in a heated debate over how state sales taxes should be applied to these transactions. This debate is of critical importance for state lawmakers because sales taxes comprise close to a third of all state tax revenues.

In just the last few weeks, Arkansas and Illinois joined New York, North Carolina, and Rhode Island in enacting legislation requiring some online retailers, like Amazon.com, to collect sales taxes on purchases made by their state’s residents. Vermont’s House of Representatives recently passed similar legislation, and Arizona, California, Connecticut, Hawaii, Massachusetts, Minnesota, Mississippi, Missouri, New […]

We appreciate the opportunity to submit comments on ways to improve Minnesota’s business climate. Historically, Minnesota has ranked above the national average in terms of many economic and social indicators. These public services are what foster economic development and what businesses look for when making location decisions. In fact, “research shows an emerging consensus that […]

An analysis of more than 550 Minnesota economic development disclosure reports— tracking more than $176 million in loans, grants, and tax increment financing (TIF) by cities, regional bodies and state agencies—reveals high costs, low wages, and an absence of standards to ensure that job subsidies produce an effective return on taxpayers’ investment. Lacking standards, the […]

Minnesota is to be commended for having a detailed tax expenditure budget-most states do not. The report, prepared by the Department of Revenue, is a useful resource for the development of state tax and spending policy. Read the Full Report (PDF)