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Minnesota Governor Seeks Reduction in Sales Tax

  • Jan 23, 2013 | Gail Cole

 Minnesota Governor Wants to Decrease Sales Tax, Increase Income Tax.

Update 3.1.13: The Minnesota Department of Revenue has released a Sales Tax Reform Overview of Governor Dayton's proposed budget. 

Minnesota Governor Mark Dayton (D) wants to reduce the state sales tax from 6.875 percent to 5.5 percent. Certain goods and services that are currently exempt from sales tax would be taxed under the governor's plan. According to the governor's blog, this would be "the largest reduction to the state sales tax rate in Minnesota history."

The sales tax changes are part of broader reforms to the state's tax system found in the governor's fiscal year 2014-15 budget, released on January 22. In addition to a drop in the state sales tax rate, the governor proposes decreasing local property taxes. On the other hand, income tax for individuals earning annually $150,000 or more (and couples with a combined annual income of $250,000 or more) would increase by 2%. The new income tax rate would be 9.85%.

The proposals prompted Senate Minority Leader David Hann to quip, "Get ready for more taxes." If the governor has his way, services such as haircuts and car repairs would be taxed. High priced clothing (above $100) would also be subject to the sales tax; currently, all clothing in Minnesota is exempt. (reuters.com).

His goal? To improve "the lives of Minnesotans through major investments in education, new initiatives for a stronger economy, and a fair tax system." He expects his plan to "yield returns in new jobs, private investments, vibrant communities and additional state and local tax revenues… ."

Governors across the nation are tweaking their budgets as they search for ways to increase revenue without emptying people's pockets. Massachusetts Governor Deval Patrick (D) has proposed reducing the sales tax and increasing the income tax. Nebraska Governor Dave Heineman (R) would like to eliminate individual and cooperate income taxes, as well as numerous sales tax exemptions. In Louisiana, Governor Bobby Jindal (R) has proposed eliminating individual and corporate income taxes and increasing the state sales tax.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.