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Tax collected from Minnesotans $75M more than forecast in October - Bring Me The News

Tax collected from Minnesotans $75M more than forecast in October

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Minnesota collected almost $75 million more in taxes from citizens than anticipated in October, generating almost $1.7 billion in revenue.

The Minnesota Management and Budget Office (MMB) reported net revenues in October were 4.7 percent more than was predicted in February, with $1.687 billion collected.

Revenue from individual and corporate income taxes were $21 million and $19 million ahead of projections respectively, though sales tax generated $1 million less than expected.

It means that for that for the 2015 fiscal year, tax collections are up 0.5 percent, or $29 million, compared to earlier estimates, the Star Tribune reports.

Budget officials have cautioned people against reading too much into the figure, saying, "Wide swings in variances may be caused by variations in the rate at which receipts are received and refunds are issued."

It follows MMB figures released last month which showed the state was lagging $46 million behind its tax income projections after the first quarter of the fiscal year, in part because people withheld lower than expected amounts.

Minnesota tax revenue above pre-recession high

Minnesota has recovered from the financial crisis better than nearly all other states when it comes to tax revenue, according to the Washington Post.

The newspaper reported that, based on second quarter figures from 2014, Minnesota collected 16.9 percent more tax compared to the state's pre-recession high.

The figures were compiled by Pew Charitable Trusts, which found Minnesota had the third highest tax rebound following the recession, behind North Dakota, where the booming oil industry has sent tax revenues rocketing an incredible 119.2 percent, and Illinois.

The trust found that 29 states have still not matched their pre-recession highs, and said that the increases seen in Minnesota and Illinois is mainly down to tax increases implemented since the recession.

Figures from the Pew Charitable Trust show how Minnesota's tax revenues have rebounded from pre-recession levels.

Figures from the Pew Charitable Trust show how Minnesota's tax revenues have rebounded from pre-recession levels.

Tax hikes behind revenue increase

The increase in Minnesota collections seen in 2014 followed a series of tax hikes in 2013, which led to the Tax Foundation referring to Minnesota as "The Land of 10,000 Taxes".

The same organization ranked Minnesota 4th in the 10 least tax-friendly states in the country for businesses, highlighting a corporate income tax rate that is higher than everywhere else in the country except Washington D.C., USA Today reports.

Gov Mark Dayton signed a series of tax changes into law in May 2013, which was designed to generate $2.1 billion in extra revenue. It included a $1.60 per packet hike in cigarette taxes, and individual income tax hikes designed to hit the state's wealthiest, the Star Tribune reported.

This increase, which according to the Pioneer Press is the largest in state history, was used against Dayton by Jeff Johnson, his opponent in the Gubernatorial election.

But Dayton argued that the tax hikes had helped to eliminate the state's budget deficit and boosted funding for the state's schools, the Pioneer Press notes.

In May he signed into law $508 million in tax cuts for middle-income families and businesses as a result of budget surplus due to the hikes in 2013, MPR says.

He was re-elected comfortably in last Tuesday's election.

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