Minnesotans Moving to Lower Tax States

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Monday night I visited with Americans for Prosperity MN Chapter Executive Director Jason Flohrs to look at WHY high earners in MNpare leaving in such large numbers. Jason does a great job of breaking down the specific tax policies in MN that are hurting their tax base and tax revenue.

I have talked before how Petro Serve USA left Moorhead for West Fargo, and there are a lot of other anecdotal stories of MN business leaders that are leaving the state for greener pastures...pun intended.

There have been a lot of positive rankings for Minnesota lately. Politico has them ranked as the second strongest state in the nation, Gallup poll ranked MN #1 in Job Creation Index, AARP ranks MN as the best state to retire, and last year CNBC said Minnesota is the #1 state in the nation for business. These sort of results surprised some people, including myself, after Minnesota decided to raise taxes on upper income people in 2013 (MN has 4th highest income tax rate in the nation for upper income people). When I initially heard the news, I thought there would be a mass exodus of wealthy people out of Minnesota. With some of the recent rankings for Minnesota, I was hoping that maybe I am being proved wrong. Unfortunately for Minnesota and its tax base, it may look like I was correct in my assessment.

Peter J. Nelson, J.D., Vice President and Senior Policy Fellow at the Center for the American Experiment, has put together some incredible information about the mass migration that Minnesota is seeing, especially of its top income earners. To be fair, there are a lot of factors that go into a person/family making a move, and Mr. Nelson believes that taxes are a big part of that decision for high income earners. Click HERE to read his report.

According to Mr. Nelson’s report, between 2013 and 2014, Minnesota lost nearly a $1 billion in net household income to other states.

You can see this trend has been happening for several years now, and the 2013-2014 data is a RECORD number of net household income lost. To put this in perspective, from 1992 to 2014, the average net annual loss of household income over this time period was $346 million in 2014 dollars. So this past year, after Minnesota raised its state income taxes to the 4th HIGHEST in the nation, the net household income loss went to record levels.

One of the most concerning aspects of this report is the type of people that are leaving the state of Minnesota. As you can see in the graphic, Minnesota is losing some of its BEST revenue generators. People that are between 45 - 54 and making over $100,000 per year.

When you see Minnesota’s top revenue generators leaving the state in droves, and the Governor is proposing $100 million this session to reverse racial disparities in housing, education and jobs...you have to wonder who is going to pay for this $100 million program? Where is that money going to come from this upcoming session?

Another really good article on this topic: Minnesota's Great Wealth Migration