Minnesota business taxes are 15th-lowest in the Nation

Minnesota’s taxes on businesses are the 15th lowest in the nation. That is the finding in the annual study conducted by Ernst & Young and the Council on State Taxation, a national association of corporate tax attorneys.

“The claims often made by Governor Tim Pawlenty that Minnesota has an uncompetitive tax structure for businesses are false, and this study proves it,” said Wayne Cox, executive director of Minnesota Citizens for Tax Justice.

The study, Total State and Local Business Taxes 2009, also found:

Minnesota’s annual business taxes would have to be $940 million higher in order to reach the national average of the states.

Minnesota’s total state and local taxes on businesses in 2009 were 4.3% of the state’s private sector Gross State Product. The national average for the states was 4.7%.

Minnesota’s state and local taxes on businesses grew at a much smaller rate over the last four years than the national average for the states.

In an earlier finding, COST said, because of deductions, Minnesota actually only collects 30 cents on the dollar of the 9.8% corporate income tax rate. COST said credits and exemptions under the Minnesota corporate net income tax totaled 70%.

COST also gave Minnesota the second highest score in the nation for fair, efficient tax administration.

COST, an association of 600 corporate tax attorneys, commissions Ernst & Young to conduct the study each year. It tallies all state and local taxes imposed on businesses, including corporate income taxes and the extent that the individual income tax falls on business owners. The study measures the taxes paid as a portion of private business activity in the state and then ranks each state.

“Pawlenty’s claims have been false for quite some time,” Cox said. “Last year, the study ranked Minnesota 13th lowest overall—yet time and time again in the last year, Governor Pawlenty has claimed Minnesota is uncompetitive.

“Last year the market value of the top 100 Minnesota corporations grew by $138 billion, or 46%. Yet Governor Pawlenty proposed $800 million in business tax cuts for next biennium—when the state faces a projected deficit of $6-$7 billion.

“The legislature took a much wiser course for jobs now and for the future. It rejected Pawlenty’s request for massive tax cuts for successful businesses. Instead it approved construction estimated to produce over 20,000 jobs, and it targeted investment in innovative new companies.”