After hearing the Minnesota state senate has proposed a new income tax top rate of 9.25% (which does not apply to me) to deal with our huge budget shortfalls, I remember my friends who moved to Seattle told me there is no income tax there.
A bit of background for drive-by readers: I do not enjoy what Republicans have done in our state. They seem aggressively politically divisive. They advocate lower taxes under all conditions while allowing fees to rise billions, borrowing billions, and pushing costs back onto local government (county or city). Also, they talk a lot of distracting nonsense about social policy. I mostly vote Democrat, although I do worry about Democrat tendencies to champion government without reigning in seemingly ever-rising expenses (and taxes I suppose). I consider myself socially liberal and fiscally conservative, although I recognize those can be at odds (you can't have government without paying for it). With that political background, I look at a simplistic comparison of Washington state and Minnesota, and a more sophisticated comparison of Minneapolis and Seattle.
A simplistic comparison at the state level from census bureau data:
Total tax revenue and estimated population are both for 2008, from the census bureau, via Wikipedia for population numbers.
Revenue/capita looks silly because it's so low. Presumably it's not right to count babies and such in the denominator. I wonder what the differences in population between Minnesota and Washington are, and if those differences are germane to this question.
Moreover, comparing the potentially silly revenue/capita to median income might be doubly silly. Still, these are numbers I could get ahold of easily.
From these numbers, it looks like Washington is a lower tax state. However, they are not as different as "9% income tax" versus "no income tax" would suggest. It turns out Washington gets more of its revenue from property taxes and sales tax, while Minnesota gets more from income tax. The $8.8B in Minnesota's property tax is almost the same as Washington's delta in sales tax ($7B). So, don't earn in Minnesota, don't buy in Washington.
All numbers are 1000s of dollars.
Refs:
http://www.census.gov/govs/statetax/0848wastax.html
http://www.census.gov/govs/statetax/0824mnstax.html
http://en.wikipedia.org/wiki/Washington
http://en.wikipedia.org/wiki/Minnesota
A sophisticated comparison at the city level based on modeling all sorts of factors:
A study comparing District of Columbia burden to the largest city in every other state, conducted by the DC government:
http://www.taxadmin.org/fta/rate/DC_Tax_Burden_07.pdf, pages 18-24
For a family of three (hmm), the percent tax burden:
The inescapable conclusion is that Seattle is a MUCH lower tax city than Minneapolis. Furthermore, Minneapolis is progressive, while Seattle is regressive. Congratulations rich Seattleites (where rich is >=$50K per year for a family), you win, if winning means paying less in taxes.
I am puzzled that the raw census bureau numbers for total revenue of the states are closer, while the per-city estimates are wildly different.
The DC report has two pages on exactly that (page 29). Possible differences include: income taxes on businesses, snow removal (!), wage levels, tax base, whether the city has privatized services (e.g., garbage collection), and higher state and local taxes reduce federal tax burden (through itemized deductions).
So, that's the cost, complicated as it is. Now if only there were some way to compare the benefits to see if Minneapolitans are getting more benefit for their additional money.
Seattle seems pretty cool. Housing is more expensive, but how long would the payback period be if one paid 4% less in taxes? (Awhile, it turns out.)
(Edited many times to reformat the tables.)
A bit of background for drive-by readers: I do not enjoy what Republicans have done in our state. They seem aggressively politically divisive. They advocate lower taxes under all conditions while allowing fees to rise billions, borrowing billions, and pushing costs back onto local government (county or city). Also, they talk a lot of distracting nonsense about social policy. I mostly vote Democrat, although I do worry about Democrat tendencies to champion government without reigning in seemingly ever-rising expenses (and taxes I suppose). I consider myself socially liberal and fiscally conservative, although I recognize those can be at odds (you can't have government without paying for it). With that political background, I look at a simplistic comparison of Washington state and Minnesota, and a more sophisticated comparison of Minneapolis and Seattle.
A simplistic comparison at the state level from census bureau data:
Minnesota/
Washington
-----------------------------------------------
Total tax
revenue (1000s) $18,320,891/
$17,944,925
Estimated population 5,220,393/
6,549,224
Revenue/capita $3,509/
$2,740
Median income $55,802/
$53,515
Rev/cap as %
of median income 6.2%/
5.1%
Total tax revenue and estimated population are both for 2008, from the census bureau, via Wikipedia for population numbers.
Revenue/capita looks silly because it's so low. Presumably it's not right to count babies and such in the denominator. I wonder what the differences in population between Minnesota and Washington are, and if those differences are germane to this question.
Moreover, comparing the potentially silly revenue/capita to median income might be doubly silly. Still, these are numbers I could get ahold of easily.
From these numbers, it looks like Washington is a lower tax state. However, they are not as different as "9% income tax" versus "no income tax" would suggest. It turns out Washington gets more of its revenue from property taxes and sales tax, while Minnesota gets more from income tax. The $8.8B in Minnesota's property tax is almost the same as Washington's delta in sales tax ($7B). So, don't earn in Minnesota, don't buy in Washington.
Minnesota/
Washington
---------------------------------------------
Total tax revenue $18,320,891/
$17,944,925
Property tax 712,643/
1,741,691
Sales tax 7,433,063/
14,400,668
Licenses 1,011,289/
938,205
Income tax 8,817,738/
0
Other 346,338/
864,361
All numbers are 1000s of dollars.
Refs:
http://www.census.gov/govs/statetax/0848wastax.html
http://www.census.gov/govs/statetax/0824mnstax.html
http://en.wikipedia.org/wiki/Washington
http://en.wikipedia.org/wiki/Minnesota
A sophisticated comparison at the city level based on modeling all sorts of factors:
A study comparing District of Columbia burden to the largest city in every other state, conducted by the DC government:
http://www.taxadmin.org/fta/rate/DC_Tax_Burden_07.pdf, pages 18-24
For a family of three (hmm), the percent tax burden:
income Minneapolis Seattle
----------------------------------
$25K 10.7% 11.4%
$50K 8.4% 5.7%
$75K 9.1% 5.0%
$100K 9.4% 4.9%
$150K 9.7% 4.2%
combined
total $37,696 $20,631
The inescapable conclusion is that Seattle is a MUCH lower tax city than Minneapolis. Furthermore, Minneapolis is progressive, while Seattle is regressive. Congratulations rich Seattleites (where rich is >=$50K per year for a family), you win, if winning means paying less in taxes.
I am puzzled that the raw census bureau numbers for total revenue of the states are closer, while the per-city estimates are wildly different.
The DC report has two pages on exactly that (page 29). Possible differences include: income taxes on businesses, snow removal (!), wage levels, tax base, whether the city has privatized services (e.g., garbage collection), and higher state and local taxes reduce federal tax burden (through itemized deductions).
So, that's the cost, complicated as it is. Now if only there were some way to compare the benefits to see if Minneapolitans are getting more benefit for their additional money.
Seattle seems pretty cool. Housing is more expensive, but how long would the payback period be if one paid 4% less in taxes? (Awhile, it turns out.)
(Edited many times to reformat the tables.)
