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Reality Check: Perspective On Minnesota’s Sales Tax

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(credit: CBS) Pat Kessler
Pat Kessler knows Minnesota politics. He's been on the beat long...
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Related: Dayton Must Sell Sales Tax Change To Fellow DFLers

MINNEAPOLIS (WCCO) – Even though Minnesota’s sales tax is high, it takes in a less money than other states with similar tax rates.

That’s because many items in Minnesota are exempt from tax, including food, clothing and medicine – items that many other states tax.

In fact, Minnesota ranks seventh in US sales taxes, at 6.875 percent.

California is number one at 7.5 percent.

Five states — Mississippi, Rhode Island, Tennessee, Indiana and New Jersey — are at 7 percent.

But that’s not the whole story. In 1969, Minnesota first imposed a 3 percent sales tax, with many exemptions, when Republican Harold Levander was governor.

It’s gone up and down since then — mostly up.

Now, Gov. Mark Dayton, a Democrat, wants to cut the tax, but apply it to many goods and services.

“For most families in Minnesota, that’s a wash,” said Dayton when he unveiled his budget plan. “Pay a lower rate on more items, it comes out the same amount total sales taxes paid by most Minnesota families.”

Here’s what you need to know:

– Reducing sales tax to 5.5 percent would move the state’s rank from seventh in the country to 27th.

– It would put the state more in line with sales taxes in the rest of the upper Midwest.

– And Minnesotans would be taxed on many more items, such as clothing, dog grooming, auto repairs, haircuts, skating lessons and legal services.

There’s an interest group for every one of those exemptions, and skeptical lawmakers are already starting to hear from them.

Related: Minnesota Budget’s Fine Print Shows Reach Of Plan

Here are some of the sources we used for this Reality Check:

Sales Taxes on Clothing

Gov. Dayton Budget Plan

MN Sales Tax Collection Data

History of MN Sales Tax

Sales Tax by State

Sales Tax Issues MN House Research

Nat’l Conference of State Legislatures Tax and Budget Iusses

 

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