Minnesota’s government is rich because of high taxes — here’s how much it can give back to the people

Minnesota amassed a $7.75 billion surplus of taxpayer dollars. If the government were to return this money, every adult in the state could receive a check for about $1,800.

Background: Wikimedia Commons

Minnesota’s government recently announced that it’s richer than ever. The state’s Department of Management and Budget said there will be a $7.75 billion surplus in the general fund — the largest in state history.

How did Minnesota make all this money? Taxes. Management and Budget confirms this, acknowledging that “consumer spending and corporate profits,” which are taxed at 6.9% (sales tax) and 9.8% (income tax) respectively, are to thank for the state’s deep coffers. The state even predicts that “higher tax receipts [in the next fiscal year] are expected to continue,” a strong possibility as Minnesotans are among the most-taxed citizens in the nation.

“This is what responsible policies look like,” Gov. Tim Walz said about the surplus. His enthusiasm was echoed by other leaders like Sen. Nick Frentz, who pointed out that it’s a “big deal” how wealthy the government has managed to become despite “all the COVID hardships” that burdened “our families, schools, workers and small businesses.”

Now the question becomes: what should Minnesota do with all this money?

WCCO reports that legislators are “rush[ing] to make their pitch for spending.” MPR ran a similar headline about how various parties are lining up for their piece of the pie: “State has $7.7 billion surplus; line forms for share of money.” Meanwhile, one poll shows that less than one third of Minnesotans want the government to spend their surplus tax dollars on government programs.

Instead, some say the money should be given back to the people. “Let’s be clear, the government did not create this surplus, the people did,” argued Rep. Steve Drazkowski. “No more wasteful spending, no more failing programs. Just give it back.”

If the state were to simply return the excess money it taxed from the people, it could apparently afford to cut everybody a check for roughly $1,400. However, this figure includes non-taxpayers like children. If the $7.75 billion were to be returned only to Minnesota’s 4,267,530 adults, each person would receive about $1,800.

However, some of the surplus has to go to budget reserve funds, so the final number would likely be less than $1,800.

Legacy outlets like CNBC, The New York Times and others all praised the effectiveness of giving checks directly to private citizens after the federal government issued stimulus money during the COVID pandemic.

However, a one-time direct tax refund is somewhat unlikely. A more plausible scenario that Minnesota Republicans seem to support involves effectively refunding the money through tax cuts. “The top priority of Senate Republicans this session will be to provide additional tax relief to Minnesotans across the state,” Republican Senate Majority Leader Jeremy Miller explained after news of the new surplus broke.