Study claims Minnesota has average taxes

Study claims Minnesota has average taxes

There are 111 comments on the TwinCities.com story from May 21, 2008, titled Study claims Minnesota has average taxes. In it, TwinCities.com reports that:

Concert series: The Wednesday Night Concerts on the Hill summer series will kick off June 11 with Dan and Jacey Lea at 7 p.m. at the Heyde Center for the Arts, 3 S. High St.

Join the discussion below, or Read more at TwinCities.com.

First Prev
of 6
Next Last
priceful

Maple Grove, MN

#104 May 25, 2008
Pragmatist wrote:
<quoted text>So if social security is 15.3%, non-negotiable, everyone pays, and Federal tax is X, state tax is Y, state sales tax, etc, give me a break down, not skewed national averages based on GDP figures. Thats average national figures, not Minnesota figures.
Social security has an income cap, and for those who are employed, the employers pick up 1/2 of that.

There's no "skewed national averages", as the claim addressed national averages and the response was tailored to that. The claim was not close to the actual level.

Perhaps if you had a specific request, and weren't so demanding, I could assist you in finding answers to your questions.
priceful

Maple Grove, MN

#105 May 25, 2008
Pragmatist wrote:
And what is that number in dollars, you can pick median or mean.
Median, and it's about $29,400 in today's dollars. Keep in mind that's for all people 25 and over with earnings, not just full-time employed.
Pragmatist

Burnsville, MN

#106 May 25, 2008
priceful wrote:
<quoted text>
Social security has an income cap, and for those who are employed, the employers pick up 1/2 of that.
There's no "skewed national averages", as the claim addressed national averages and the response was tailored to that. The claim was not close to the actual level.
Perhaps if you had a specific request, and weren't so demanding, I could assist you in finding answers to your questions.
Ok, Minnesota's corporation/business tax rate is a flat 9.8%. Businesses that are already here routinely do not invest in new plants in Minnesota due to unfavorable business climate compared to other states. My specific request is to get more investment from our companies in Minnesota. How do we do that? Most other mid-western states have rates 2-4% lower than this on income for companies. Other states entice businesses to locate there with packages of incentives, our incentives dried up. Anyway, done ranting, just sick of these policies. I agree that 50-75% that the earlier poster claimed was out of line, but 25%, for middle income families, is low. Also know that some percentage of low wage earners pay no tax other than sales tax, etc, and that skews the numbers down for the middle. Drop the bottom 20% or so of wage earners, and the top 1 or 2%, then tell me the tax burden numbers. Thats where most of our incomes are. Anytime you put in averages, and national averages, the numbers get muddied. Its easy to quote government projected numbers nationwide, but you get to factor in much lower cost of living areas with much higher cost of living areas.$60k is pretty good in Hot Springs Ar, but it doesn't pay for much in San Diego. Minnesota is a higher cost of living state, probably in the top 10 or so.$100k isn't what it used to be.
Pragmatist

Burnsville, MN

#107 May 25, 2008
priceful wrote:
<quoted text>
Median, and it's about $29,400 in today's dollars. Keep in mind that's for all people 25 and over with earnings, not just full-time employed.
I couldn't make it on that, could you?
priceful

Maple Grove, MN

#108 May 25, 2008
Pragmatist wrote:
<quoted text>I couldn't make it on that, could you?
By myself? Sure. But I'm not typical.
priceful

Maple Grove, MN

#109 May 25, 2008
Pragmatist wrote:
Drop the bottom 20% or so of wage earners, and the top 1 or 2%, then tell me the tax burden numbers.
I haven't seen a comprehensive study with modern numbers, but the Tax Foundation covered this a coupled decades ago. For total tax burdens, it was actually highest at the edges and lowest in the middle. I would guess that has changed with time, with probably at least more dropoff on the higher income side of the graph.

http://taxfoundation.org/research/show/2081.h...

People often forget that a goodly chunk of low income households are retirees and students, with the former's finances being not very intuitive, since there is much more wealth than among younger people (obviously), so income doesn't necessarily indicate relative financial ease of life.
Pragmatist

Burnsville, MN

#110 May 25, 2008
priceful wrote:
<quoted text>
I haven't seen a comprehensive study with modern numbers, but the Tax Foundation covered this a coupled decades ago. For total tax burdens, it was actually highest at the edges and lowest in the middle. I would guess that has changed with time, with probably at least more dropoff on the higher income side of the graph.
http://taxfoundation.org/research/show/2081.h...
People often forget that a goodly chunk of low income households are retirees and students, with the former's finances being not very intuitive, since there is much more wealth than among younger people (obviously), so income doesn't necessarily indicate relative financial ease of life.
At higher incomes, 6.2%(social security) drops off at $97k? But Federal +State goes up to about 43%.......so while burden is higher, impact is less. Higher income would still have a higher overall burden.
priceful

Maple Grove, MN

#111 May 25, 2008
Pragmatist wrote:
<quoted text>At higher incomes, 6.2%(social security) drops off at $97k? But Federal +State goes up to about 43%.......so while burden is higher, impact is less. Higher income would still have a higher overall burden.
Marginal rates don't tell the whole story. To be paying 43% marginal combined rates, income would need to exceed $357,700, and that rate only applies to money after that threshhold. You also have to realize that as incomes increase, income sources diversify, almost all of which that are not strict wage earnings are taxed at much lower rates.

With respect to FICA, it's 6.2% capped at $102K. So at the highest income bracket threshhold (federal), someone pays $6,324. The effective rate on that is 1.8% and declines as income increases.

Also, consumption taxes go down as a percentage of income as income increases, since higher income individuals save and invest higher proportions of their income than lower income people.

It would be nice if the Tax Foundation updated that study, and I'm curious as to why they don't.
Pragmatist

Burnsville, MN

#112 May 26, 2008
priceful wrote:
<quoted text>
Marginal rates don't tell the whole story. To be paying 43% marginal combined rates, income would need to exceed $357,700, and that rate only applies to money after that threshhold. You also have to realize that as incomes increase, income sources diversify, almost all of which that are not strict wage earnings are taxed at much lower rates.
With respect to FICA, it's 6.2% capped at $102K. So at the highest income bracket threshhold (federal), someone pays $6,324. The effective rate on that is 1.8% and declines as income increases.
Also, consumption taxes go down as a percentage of income as income increases, since higher income individuals save and invest higher proportions of their income than lower income people.
It would be nice if the Tax Foundation updated that study, and I'm curious as to why they don't.
Wouldn't the AMT kick in long before $357k and raise the marginal rates by decreasing deductions?
Peter

Houston, TX

#114 May 26, 2008
priceful wrote:
<quoted text>
Marginal rates don't tell the whole story. To be paying 43% marginal combined rates, income would need to exceed $357,700, and that rate only applies to money after that threshhold. You also have to realize that as incomes increase, income sources diversify, almost all of which that are not strict wage earnings are taxed at much lower rates.
With respect to FICA, it's 6.2% capped at $102K. So at the highest income bracket threshhold (federal), someone pays $6,324. The effective rate on that is 1.8% and declines as income increases.
Also, consumption taxes go down as a percentage of income as income increases, since higher income individuals save and invest higher proportions of their income than lower income people.
It would be nice if the Tax Foundation updated that study, and I'm curious as to why they don't.
That's partly true. But it's net worth (income + time + saving) that tends to trigger income that's below the marginal rate, not income alone. For example, capital gains are taxed at 15%, but income comes across at 35%. Stock and options are often a part of high earner compensation. But both are taxed as normal income (you get a little deferral, but that's it). Also, as income increases, deductions are lost by formula thereby increasing the effective rate. Other things are lost too like the ability to contribute pre-tax to an IRA and, this year, higher income people get nada toastada for stimulus checks. Also, things like Health Savings Accounts, deductions for child care, credits for first time home buyers, etc. all have a smaller proportionate impact on higher income people and again raise effective rates above the posted speed limits. Spouses of high earners really get hit. If one spouse makes, say,$400,000 and the other goes to work making just $70,000, that $70K is taxed at the maximum rate. So, in MN, the spouse pays over 50%(spouse goes to work and the gov't gets more out of it than the spouse).
Pragmatist

Burnsville, MN

#115 May 26, 2008
priceful wrote:
<quoted text>
Marginal rates don't tell the whole story. To be paying 43% marginal combined rates, income would need to exceed $357,700, and that rate only applies to money after that threshhold. You also have to realize that as incomes increase, income sources diversify, almost all of which that are not strict wage earnings are taxed at much lower rates.
With respect to FICA, it's 6.2% capped at $102K. So at the highest income bracket threshhold (federal), someone pays $6,324. The effective rate on that is 1.8% and declines as income increases.
Also, consumption taxes go down as a percentage of income as income increases, since higher income individuals save and invest higher proportions of their income than lower income people.
It would be nice if the Tax Foundation updated that study, and I'm curious as to why they don't.
How does a 6.2% tax become a 1.8% effective rate at $100k? I don't get it. No matter what else, you pay 6.2% of the first $100k, wouldn't that be an effective rate of 6.2%?

Tell me when this thread is updated:

Subscribe Now Add to my Tracker
First Prev
of 6
Next Last

Add your comments below

Characters left: 4000

Please note by submitting this form you acknowledge that you have read the Terms of Service and the comment you are posting is in compliance with such terms. Be polite. Inappropriate posts may be removed by the moderator. Send us your feedback.

Frederic Discussions

Title Updated Last By Comments
Haunted Hunting Lodge in Wascott, WI (May '06) Mar '17 Scott 44
Bonny Vogel (Jan '17) Jan '17 Is this a dating ... 1
Looking for odd or eccentric people (Dec '16) Dec '16 TD Mischke 1
News Milltown man faces infant abuse charges (Aug '06) Sep '16 Justice For All 7
Trump for President, He will win. watch (Aug '16) Aug '16 olive oyl 1
Ted Cruz Exposed, watch the Video. then Vote (Apr '16) Apr '16 Vote For Trump 1
News Wardens ask for help on illegal dumps (Nov '12) Nov '14 XST 2

Frederic Jobs

More from around the web

Personal Finance

Frederic Mortgages