Minnesota: This is What Effective Incidence Analysis Looks Like


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A recent Republican proposal in the Minnesota Legislature would cut the state’s bottom two income tax rates over three years. Thanks to Minnesota’s ability to provide tax incidence analysis (an examination of how different income groups are impacted by policy changes) the public can be informed about the real consequences of this proposal.

After analyzing the plan, the state's Revenue Department and the House Research Department reached the same conclusion: these tax reductions would be regressive and benefit upper income families disproportionately.

Governor Dayton’s response to the Republican’s plan will warm the heart of any tax justice advocate. "It bothers me," he said, "the Republicans would present this as a tax cut targeted for lower and middle-income families when the facts are the opposite. The greatest benefit goes to upper-income Minnesota families. Once again they just have shown their values, their priorities are to benefit the richest Minnesotans at the expense of the rest of Minnesota."

While we are giving kudos to Minnesota and that state’s ability to conduct timely analyses, we should note that the Department of Revenue recently released their 2011 Minnesota Tax Incidence Study. Other states interested in improving their analytical capacity should look to Minnesota.

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