Tuesday, July 14, 2009

Paying more for someone else's better Minnesota 

The Tax Foundation has calculated the total effective marginal tax rate on the top income earner (over $1 million for a married couple; $800k for a single) by state, if the Obama health care plan for a surtax comes to fruition. Minnesota comes ninth on the list, with a total tax (income, Medicare, health surtax, and state income tax) at 52%. That means that the one millionth dollar earned by a Minnesotan would be 52% government and 48% citizen, the person who worked to get that last dollar.

Had gubernatorial candidate Tom Bakk had his way, that rate would be 53.35%, pulling within .05% of Vermont for seventh place. It would have been more expensive to be a millionaire in Minnesota than New York City or Washington D.C. South Dakota, by the way, would have a top rate of 44.88%.

Meanwhile, President Obama is telling Ghanaian people that a 20% skim for government is no place where business wants to invest. From your mouth to Dane Smith's ear, Mr. President!

(For more on effective marginal rates, see Kotlikoff and Rapson [2006].)

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