Minnesota One of the Worst Tax Climate States

Dear Friends:

The non-partisan Tax Foundation recently released the 2014 edition of the State Business Tax Climate Index which ranks Minnesota in the bottom ten states that suffer from “complex, non-neutral taxes with comparatively high rates.” Minnesota dropped from 45th to 47th place on their list. That is not the right direction. According to the report, Minnesota “enacted a package of tax changes that reduce the state’s competitiveness.” The new taxes include a new sales tax on personal vehicle repairs, farm equipment repairs, and a retroactive hike in the individual income tax rate. You can find the full report here: http://tinyurl.com/qg4j64d.

Governor Mark Dayton and the Democrats’ 2013 all tax budget can take most of the credit for this and will take more from hard working Minnesota families by implementing new taxes and failing to conform to some federal tax codes.

 Some examples of these new taxes include:

 Farmers Tax: Farmers and all consumers will be affected by the new sales taxes on warehousing and storage. Items such as propane, fertilizer, groceries, etc… may be affected by this tax.

Small Business Tax: This tax imposes new “Business to Business” sales taxes of $314 million over FY 2014-15 through a sales tax expansion including warehousing and storage, electronic and precision equipment repair, and commercial and industrial machinery and equipment repair.

 Tax on Rural Broadband and Cellular Services: Cable, telephone, and cellular companies must now add a sales tax on routers, switches, amplifiers, and digital processors that they purchase. Former DFL Speaker of the House Margaret Anderson Kelliher has even expressed concerns over these new taxes. There “will be slower adoption of high-speed Internet in outstate Minnesota,” stated Kelliher and that this new tax is a “step backward.”

Motorist (Wheelage) Tax: Under current law, metropolitan counties can collect $5 on every vehicle, per year. Under a new law passed last session, counties are allowed to collect $10 from 2014-2016 and up to $20 thereafter on every vehicle your family owns.

Adoption Tax Credit: On your federal taxes, families adopting a child may exclude up to $12,970 in employer-provided adoption benefits. On your state taxes, there is no longer a credit for adopting a child. Your family will now pay more when going through the adoption process.

Marriage Penalty: As estimated, 650,000 Minnesota families will pay on average $120 more per year in taxes after the Democrats defeated a Republican amendment to fix this problem. Marriage penalties occur when a family filing jointly would enter a higher bracket than if they had filed separately.

We know that higher taxes don’t lead to a healthier economy. Regular session starts again in February and the bottom line is that before we take another dime from hardworking Minnesota families, we should go line-by-line through the budget and cut the wasteful spending. These taxes are increasing costs for hardworking taxpayers while padding the coffers of the state to spend tax dollars on wasteful and ineffective programs. A better way to a strong, healthy Minnesota economy is to promote economic growth, and defund and remove wasteful government.

Please do not hesitate to contact me if you have any questions or comments. I can be reached by telephone at (651) 296-3826 or (855) 407-7386, by e-mail at sen.torrey.westrom@senate.mn, or via mail at 107 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155.


Senator Torrey Westrom

District 12
107 State Office Building
St. Paul, MN 55155
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