Minnesota Senate Democrats propose new tax on social media companies

Yahoo

03-04-2025

A view of the Capitol dome on March 6, 2025. Photo by A.J. Olmscheid/Senate Media Services.
Minnesota Senate Democrats are proposing a first-in-the-nation tax on large social media companies that collect data on Minnesota consumers.
The bill, chief authored by Senate Taxes Committee Chair Sen. Ann Rest, DFL-New Hope, would impose a tax on social media companies based on the number of monthly active Minnesota consumers from whom the company collects data.
Minnesota is facing a looming multi-billion dollar budget deficit, and lawmakers are working to cut spending and generate new revenue to offset the imbalance. In an interview, Rest said taxing social media companies is a solution that doesn't hurt Minnesotans — it doesn't cut critical social services or increase their taxes.
'We know we're going to see some cuts, but I also felt it was my job to look for some fair ways to provide the revenue,' Rest said. 'We're talking about folks like Elon Musk and Mark Zuckerberg. We've been giving to them for years and years, and now we're going to ask those social media businesses to participate in solving Minnesota's budget challenges.'
Under the bill (SF 3197), if a social media company has fewer than 100,000 monthly consumers from Minnesota, it wouldn't be taxed. If the social media company has between 500,000 and 1 million Minnesota consumers, the tax per month would be $40,000 plus 25 cents times the number of consumers over 500,000.
For the largest social media companies — those that have over 1 million Minnesota consumers — the tax per month would be $165,000 plus 50 cents times the number of consumers over 1 million.
The Department of Revenue estimates that the tax would apply to 15 social media companies. The tax, which would begin in January 2026, would generate around $46 million in the first fiscal year, $92 million in the second and about $100 million annually after that.
Meta, the parent company of Facebook, reported $62 billion in profit in 2024, on $164 billion in revenue.
Even as the companies make hundreds of billions of profit, social scientists are sounding the alarm on the widespread use of the apps, especially by young people.
Republicans this year have said that they will not support any new taxes on Minnesotans, so lawmakers have been looking for areas to cut spending. When asked whether House Republicans would support a tax on social media companies, a spokesperson said no.
'Our position is no tax increases,' a House GOP caucus spokesperson said.
New York since 2021 has proposed taxing social media companies for data collection, or data mining, and a similar bill is again being considered by the New York Legislature this year.
Rest said that she hopes Minnesota's legislation can be regarded as a model for other states that are experiencing budget shortfalls.
The bill will be heard in the Senate Taxes Committee on Wednesday, and Rest said House Taxes co-chair Rep. Aisha Gomez, DFL-Minneapolis, will be introducing the House version soon.