From concealed weapons to concealed wealth…
An eager reader points to a May article indicating that there is no evidence that Minnesota’s rich folks are fleeing to other states to hide their wealth from the new higher income tax tier Governor Mark Dayton got passed in 2013:
Critics predicted that the ultra-affluent would flee after Gov. Mark Dayton secured 2013 passage of a new income tax tier of 9.85 percent on individuals who make more than $156,000 a year. But the latest data show that the number of people who filed tax returns with over $1 million in income grew by 15.3 percent in the year after the tax passed, while the new top tier of taxpayers grew by 6 percent [Adam Belz and J. Patrick Coolican, “There’s No Evidence That Ultrarich Are Fleeing Minnesota,” Minneapolis Star Tribune, 2016.05.07].
Belz and Coolican do find some data indicating that, prior to Governor Dayton’s tax hike, Minnesota’s wealthy class wasn’t growing as quickly as South Dakota’s:
Between 2005 and 2014, the number of tax returns filed with more than $1 million in income rose on average 8 percent each year in Iowa, 8.5 percent per year in Wisconsin and 3 percent per year in Minnesota. From 1997 to 2013, South Dakota, which has no state income tax, nearly quadrupled its number of tax filers who earn more than $1 million per year [Belz and Coolican, 2016.05.07].
But note that Minnesota has had and South Dakota has resisted state income tax since well before that period. South Dakota’s higher growth rate may just mean we’re playing catch-up from a far lower percentage of wealthy residents. We still haven’t caught up: in 2015, 6.0% of Minnesota households had over a million dollars in investable assets; 5.1% of South Dakota households had comparable wealth.
Oh, and Minnesota has five billionaires; South Dakota only has one. The states with the most billionaires, California and New York, have top marginal income tax brackets of 13.3% and 8.82%, respectively.