Hey, it’s tax time again!
- Currently Listening To: "Can't Fight This Feeling", REO Speedwagon
Hey, it’s tax time again!
The 2015 Minnesota Tax Incidence study is out. Since I last posted about this two years ago, not much has changed. Details below:
Tax time is here, and that means it’s time to calculate our 2014 tax incidence below…
Hey, it’s time for my now-annual blog post on tax incidence! Graphs below…
Let’s start with the standard picture: the overall effective tax rate. Little has changed in the past few years.
Minnesotans are paying about 11½% of their income in taxes, the same since 2000. It is even projected to go down a few ticks in the future.
Next is my favorite graph, that of tax incidence broken down by decile. The same as before, the wealthiest 10% pay a lower share of their income in taxes than the middle class:
No wonder Governor Dayton’s plan to raise taxes on the rich is popular.
There really isn’t much new in this report. Despite all the hemming and hawing over the past several years, the tax situation is mainly status quo in Minnesota.
I have nothing better to do on a Saturday morning than go over finances. In doing so, I realized that I had miscalculated the tax incidence graphs I had previously created. The biggest change is for payroll taxes in college: instead of looking at my W2s I just assumed I was paying full Social Security and Medicare taxes on my student jobs. In fact, I was not. This reduced my tax burden in the late 90s. The 2012 blog post has been updated with the most accurate figures.
So I’ve done our 2012 taxes, and as such, I can update my last blog post on tax incidence. Graphs below…
Note: These graphs have been corrected in the 2012 Tax Incidence post.
I like analysis, and I like tax policy. Put the two together, as I’ve done before, and it’s a pretty sweet time. But I have a lot of numbers at my disposal, much more than the past couple of years. So because I had little better to do, I decided to calculate my tax incidence for the time I’ve been working, which is a very long time indeed. All the details after the jump.
Minnesota’s latest tax incidence study came out this week (and can be found here). I’ve written about it before, and the trends are pretty much the same as previous studies. Two graphs jump out at me. The first is the overall effective tax rate:
It peaked in 1994, and since 2000, has stayed remarkably stable. It’s hard to argue that government is taxing people more and more.
The next is the updated tax incidence graph. As before, the wealthiest people pay a lower rate than the middle class in Minnesota:
Same story as before, really. It also puts Governor Dayton’s income tax proposal in perspective.
Well, three actually, but two concepts: Price of Government and Tax Incidence. They are pretty important in understanding Minnesota’s budget and tax issues.