MINNEAPOLIS (AP) -- Federal data shows the tax burden felt by Minnesotans has eased a bit, spurring another debate between Republicans and Democrats over whether taxes should be raised.
The data, analyzed by the state Revenue Department, shows that Minnesota dropped from fifth in 1999 to eighth in 2000 among the states in total taxes as a percentage of income.
Fiscal experts say the drop reflects major income-tax rate reductions that went into effect in 2000.
But taxes per capita actually increased by about $100 from 1999 to 2000 thanks to a strong rise in incomes and revenues in the last year of a prolonged economic boom. And Minnesota's per capita taxes of $3,694 -- including income, sales and local property taxes -- remained about 20 percent above the national average of $3,100.
Republicans and advocates for lower taxes and smaller government perennially point to Minnesota's ranking as an indicator of a bad business climate and as a competitive problem for the state.
In recent months, Gov. Tim Pawlenty and business lobbying groups have declared rankings ranging from first to fifth for Minnesota.
DFLers and interest groups who are opposing big cuts in government programs say the latest rankings show that Minnesota has at least a little room to raise taxes and recoup some of the billions of dollars returned in late-1990s tax cuts.
"Minnesota has been cutting taxes more rapidly than other states, and this shows that pattern," said Wayne Cox, executive director of Minnesota Citizens for Tax Justice. "The problem now is that Minnesota has cut taxes so much that it can't pay its bills anymore."
Further income and property tax cuts, which went into effect in 2001 and 2002, may already have moved Minnesota out of the Top 10 in taxes, Cox contends.
Federal data comparing the states lag behind the current fiscal year, so at any given time Minnesota is always a little in the dark about where it stands relative to other states.
Republicans insist that the recent reductions in Minnesota tax burdens benefited most citizens and should not be surrendered. They want to stick to a no-tax-increase pledge and prevent Minnesota from being ranked one of the highest-taxed states in the future.
Revenue Commissioner Dan Salomone said the Pawlenty administration sees the change as welcome but not that dramatic, and certainly not as grounds for retreat.
"This has been a long-fought battle to get our rankings to moderate levels," Salomone said. "It's nothing to crow about, being Number 8 overall. So as we proceed to fix our budget problems, if we deal with it on our spending side, our rankings will improve a little more."
The ranking for Minnesota's individual income taxes, as a percentage of income, dropped from sixth to ninth.
In property taxes, Minnesota ranked 27th, or about 3.1 percent of income, compared with a national average of 3.2 percent.
Minnesota also ranked lower than the national average on its general sales tax collections. The rate is 6.5 percent in most communities, but no tax is collected on groceries or clothing. Sales tax collections in Minnesota were 33rd highest, taking about 2.6 percent of income, compared with 2.8 percent as the national average.
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