The Inauguration of Minnesota Gov. Tim Walz, Lt. Gov. Peggy Flanagan, Attorney General Keith Ellison, Secretary of State Steve Simon and State Auditor Julie Blaha at the Fitzgerald Theater, on Jan. 7, 2019, in St. Paul, Minn. (Photo by Eric Miller/Workingpress Photo Agency)
You deserve to keep what you earn, and Your Survival Guy puts a lot of emphasis on low taxation when it comes to picking my annual Super States. There’s no greater insult from politicians than using high taxes to explain that they know how to spend your money better than you do. Now that Kamala Harris has elevated Gov. Tim Walz to the position of running mate, it bears noting that his record on taxation is pretty bad. As soon as Walz’s party got control of the Minnesota legislature, he implemented massive spending and tax hikes on Minnesotans. Chris Edwards explains at the Cato Institute:
Spending
Walz signed a huge budget increase in 2023 that boosted general fund spending 36 percent from the 2022–23 biennium to the 2024–25 biennium. However, state spending increases are more reasonable when measured over Walz’s full tenure from 2019 to 2025, as shown in the chart. Annual average spending growth has been 6.0 percent, which is similar to the 50-state average growth of 5.9 percent over the same period. The Minnesota legislature was divided from 2019–2022, but Walz’s party has had full control since 2023.
An analysis of the Minnesota budget noted, “When the budget for the 2024–25 biennium was enacted in May 2023, a significant surplus from the previous biennium was anticipated to be available for one-time uses in the current biennium. After the close of the FY 2022–23 biennium, the actual surplus that carried forward into the current biennium was $13.103 billion. In the enacted budget, this one-time resource was partially allocated to one-time revenue reductions and one-time spending increases across the budget.” The revenue changes were mainly a one-time $1 billion rebate combined with net tax increases going forward.
Minnesota’s tax revenues and spending are higher than the 50-state average, measured as a percentage of income. But to its credit, the state government has relatively low debt and a large rainy day fund.
Taxes
Despite revenue growth and surpluses, Walz has pushed for tax increases on businesses, high earners, and the middle class. His proposed hikes were mainly passed when his party controlled the legislature but mainly rejected when the legislature was divided. Walz has supported tax cuts, but primarily in the form of narrow tax breaks and subsidies.
In 2019, Walz’s state budget would have added “$2 billion more in new spending, and taxes would increase by $1.3 billion to pay for it, with the rest of the money coming from an existing surplus.” But he compromised with the legislature, and the final tax increase was about $330 million annually. Walz also pushed for higher gas taxes and vehicle fees to raise about $1 billion annually for transportation, but those increases were rejected.
In 2021, Walz proposed adding a new individual income tax rate of 10.85 percent above the top rate of 9.85 percent, a surtax on capital gains and dividends, and a hike to the corporate tax rate from 9.8 percent to 11.25 percent. The proposals—which would have raised about $1.6 billion annually—were rejected by the legislature.
In 2023, Democrats took control of the legislature and Walz could enact his misguided tax policies. He signed HF 1938 raising taxes on businesses with foreign income, reducing the standard deduction for high earners, and imposing a new tax on investment income. At the same time, he handed out an array of low-income credits, a one-time rebate, and special-interest breaks for e‑bikes, green aviation fuel, film production, and other items.
The same year, Walz hit the middle class with HF 2887, which raised taxes and fees on vehicles and transportation. The increases included indexing the gas tax for inflation, increasing vehicle registration taxes, raising fees on retail deliveries, and raising sales taxes in the Twin Cities area.
The governor hit the middle class again in 2023 with a large tax hike to pay for a new paid leave program. The legislation imposed a 0.7 percent tax on wages to fund the program’s benefits, but then new legislation in 2024 increased the tax rate to 0.88 percent of wages. The tax will raise $1.2 billion the first year of operation and rising amounts after that.
Action Line: Raising taxes on middle-class Minnesotans to fund spending on special interest groups is about as bad as Your Survival Guy can imagine a governor could get. Putting political interests ahead of constituents is the worst type of governance there is. That’s why so many Minnesotans are looking for a better America. If you’re one of them, begin your search with Your Survival Guy’s 2024 Super States. Then, click here to subscribe to my free monthly Survive & Thrive letter.
E.J. Smith - Your Survival Guy
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