Minnesota DFLers are romping and frolicking in money from the “surplus” – a misnomer referring to the billion dollars overtaxed from Minnesota’s productive class.
But more and more, the evidence shows that the “surplus” is a false positive – and that Minnesota’s productive class is choosing greener, lower-tax pastures:
Minnesota, on net, lost $1 billion of income to other states between 2013 and 2014. Specifically, the state lost $944 million in adjusted gross income reported by tax filers who moved in and out of Minnesota. This is the largest net loss of income ever reported for Minnesota, and it represents a dramatic rise from just three years ago, when the state lost $490 million.
Gotta tell you – if Wisconsin somehow manages to stay the course, the greater Hudson area is looking better and better…
“But it’s mostly retirees leaving the state!”.
Well, no (emphasis added):
While the IRS has been tracking income movement since 1992, it released a new data series last year that for the first time provides annual information on who is moving from state to state, based on age and income. These new data refute a long-held assumption that Minnesota’s income loss is primarily due to retirement.
In fact, people in their prime working years represent the largest portion of the net loss of taxpayers and income. Working-age people between 35 and 54 account for nearly 40 percent of Minnesota’s net loss of tax filers for the 2013-14 period. People between 55 and 64 — most of whom are still in the workforce — account for another 23 percent.
“But it’s just the ‘one percent’, moving to their beach houses in Coral Gables!”
Some of them certainly are; capital is mobile, and when it needs to, it moves.
But no – in fact, the biggest chunk is the part of the middle class that provides both much of the spending and many of the entrepreneurs that provide jobs for, well, everyone else:
But this isn’t just about the top 2 percent, as the governor wants people to believe.
Minnesota taxes on the middle class are still high relative to other states. Not surprisingly, Minnesota is, on net, losing this population, too. In fact, between 2011 and 2014, taxpayers earning between $100,000 and $200,000 accounted for 41 percent of the state’s net population loss.
Minnesota’s consistent net loss of people and income to other states poses serious challenges to the state both today and into the future. Economic growth is currently constrained by a tight labor market, which, in part, is due to the state not attracting the people with the qualifications necessary to fill today’s jobs.
The parable of the ant and the grasshopper springs to mind.
The DFLers are the grasshoppers.