Social media platforms could be in for a popularity tax in Minnesota

A top Minnesota tax policy writer is here for the ratio — of social media users.

Sen. Ann Rest, a prominent DFLer who chairs the Senate Taxes Committee, is proposing an excise tax on social media platforms that access consumer data.

If approved, Minnesota would be the first to tax the companies. The tax rates would be based on how many Minnesota consumers use the sites, with platforms with over 1 million users charged $165,000 each month plus 50 cents for every additional user over 1 million.

Rest said the measure could bring in new revenue as the state faces a money crunch, with a projected $6 billion shortfall down the road. 

“We could be a model for the rest of the country, and no Minnesotans themselves are not going to be taxed by this,” Rest said. “Companies have been taking our data, our personal data, for years, and we haven't charged them to do that at all. This is a way to charge them as kind of their fair share.”

A revenue estimate anticipates that 15 social media sites would be subject to the tax since they have more than 100,000 Minnesota users. In the first year it took effect, it could net the state $45 million. In later years, the estimate indicates it would bring in closer to $100 million.

It’s an apparent walkback of an earlier platform by Senate Blue Dog Democrats — a caucus that includes Rest as a member – against raising taxes this year.

In a split Legislature, the bill faces a difficult, maybe impossible, path.

Republicans insist they won’t agree to proposals to raise taxes this year. Rep. Greg Davids, co-chair of the House Taxes Committee, said it’s an interesting idea but not one he’ll support.

“I think it's really a non-starter, because it's a tax increase. And our caucus is very, very strong about no tax increases,” Davids said.

Rest, of New Hope, said she remained hopeful that she could persuade GOP lawmakers to support the bill if it meant avoiding potential budget cuts.

“Individuals who own these companies are people of enormous wealth, and we want them to contribute to Minnesota's well being,” Rest said. 

Deadlines for policy bills to clear legislative committees are Friday. For budget bills, they’re a week away.

MPR News reporter Peter Cox contributed reporting.

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