(The Center Square) – Minnesota’s top marginal corporate tax rate, 9.8%, is the second-highest the nation, according to an analysis the Tax Foundation released Tuesday.
The North Star State is one of the 44 states that levy corporate income taxes. Nationally, on average, these taxes accounted for 7.07% of state tax collection and 4.04% of state general revenue in fiscal year 2021, the report said.
“And while these figures are not high, they represent a substantial increase over prior years,” the report said. “Corporate income taxes accounted for 2.26% of general revenue in FY 2020, which is more in line with historical norms.”
Many states also impose gross receipts taxes and capital stock taxes while some impose an alternative minimum tax and special rates on financial institutions, the report said.
Minnesota has higher rates compared with its neighbors.
Iowa’s top rate is 8.4%, which ranks it 10th nationally. Wisconsin ranks 13th, with a top rate of 7.9%. North Dakota top corporate income tax rate is 4.31% tax, placing it 41st in the nation. Companies that make more than $50,000 in a year pay that rate. South Dakota and Wyoming don’t levy corporate income or gross receipts taxes.
New Jersey has the highest top statutory corporate tax rate, 11.5%. North Carolina, on the other hand, has the lowest, at 2.5%.
According to the Tax Foundation, economists view corporate income taxes as double taxes, and workers, shareholders and consumers bear the burden.
“The same income is taxed once as profit and once as individual income when distributed as dividends to shareholders,” the foundation said.
The Tax Foundation reported in December that across 180 global jurisdictions, the average statutory corporate income tax rate is 23.37%. Those rates have declined from an average 40.11%.
“Countries have recognized the impact that high corporate tax rates have on business investment decisions,” the report said.