Why Wealthy Wisconsinites Could Save Money by Moving to MN

Published On: 25th September 2014

From the internet

Minnesota’s tax climate has received a lot of criticism. The reason is because it has received a reputation for higher tax on the wealthy. In fact, the tax is cited as being higher than other states. The Editor in Chief of Twin Cities Business has said that the anti-wealth policies are chasing people out of the state and causing an exodus.

Minnesota has also been ranked among the worst in the U.S. for its business taxes. However, quality of life measures helped Minnesota rank high in Forbes’ “Best States for Business.” This is one reason why neighboring states have been largely unsuccessful at attracting Minnesota businesses across their borders.

However, it has been shown in a new report that wealthy Wisconsin residents could actually see tax advantages if they made a move to Minnesota.

In the report that was released by the National Center for Policy Analysis, a non-profit, non-partisan research organization. It produced this report through collaboration with another organization that focuses on public policy.

The report showed that residents in neighboring Wisconsin are dealing with a tax burden because of the adjusted gross income that the state loses due to other residents leaving the state.

To compare states, a state tax calculator was created by the National Center for Policy Analysis, which is designed to calculate a person’s tax burden based on location. It assumes that wages would remain the same other than earnings increasing at the usual 3 percent inflation increase, and investments in retirement or savings accounts would grow by 4 percent per year. The calculations are also based on the economic theory that households manage their finances in order to smooth out their discretionary spending over a lifetime.

The state that is preferred from a tax-burden perspective depends on a variety of factors. For instance, a 25-year-old renting a home on a $30,000 per year income may be better off in one state than a number of others.

But what it found was that the higher earning Wisconsinites are not better off. A 40-year-old married couple who earns $75,000 per year and owns their home would save money if they moved to Minnesota. A 50-year-old married couple with a $100,000 income who owns their home would also fare better in Minnesota.

The 40-year couple would save $50,500 over their lifetime, whereas the 50-year-old couple would save just shy of $40,000.

Why is Minnesota better for the higher income residents? The report stated that, although the marginal income tax rates are higher in Minnesota, its property tax rate is lower. This means that homeowners would benefit from a move more than renters would. Most high earning individuals are homeowners.