Graph of the Day: Everyone Pays Taxes, Part 2

By Michael Diedrich, Policy Associate, November 29, 2011 at 11:00 am

A little while ago, we had a graph tackle the conservative distortion that 47% of people don't pay federal income taxes. That graph looked at the social insurance taxes (for Medicare and Social Security) that are automatically deducted from people's paychecks right along with the income tax. Today's graph looks at state taxes right here in MN.


(Data from 2011 Minnesota Tax Incidence study)

The set of bars on the left show the Minnesota effective tax rate (including income, consumption, and property taxes) in 1990. You'll notice that everyone is taxed at pretty much the same rate, regardless of how much they are paid. Jump ahead almost twenty years and you get the second set of bars, Minnesota's effective tax rate in 2008. This graph looks a little different.

For one thing, people in the lower income percentiles are paying more than they used to. When did this happen?

Digging into the historical data, it turns out that the effective tax rate increased for those lower percentiles during most of the '90s before a drop during the Ventura administration. When Tim Pawlenty took office, those lower income rates were close to or below where they'd been in 1990. During Pawlenty's “No New Taxes” administration, however, the effective tax rate somehow increased, especially for that 11th-20th percentile group.

The top 1% have a slightly different story. Their taxes dropped considerably at the end of Arne Carlson's administration, slowly crept upward during the Ventura administration, and more or less leveled off during the Pawlenty administration. The result of all this shifting is the graph above.

Our state has shifted from a flat effective tax rate to a regressive one in which the rich pay less of their income than the poor. This is just not right. Unfortunately, this wrongness won't end for as long as conservatives have their stranglehold on the state legislature.

The next time a conservative claims that “half of people don't pay taxes,” make sure to let them know that in Minnesota these days, the middle class pay more of their income than the rich.

Posted in Fiscal Policy | Related Topics: Graphs  "No New Taxes"  Economic Inequality  Income Tax  Tax Fairness