Minnesota proposal would impose tax on social media platforms based on number of users

CBS News

09-04-2025

Key Minnesota Democrats on legislative tax committees want popular social media platforms to pay a premium for profiting off
of consumer data
.
They believe the approach would be the first of its kind in the country. Large companies with more than 1 million users would pay $165,000 per month plus $0.50 per person on the sites.
Platforms with fewer than 100,000 users would not pay any tax and those platforms that fall in between would have varied rates.
"Nobody is providing these ostensibly free services out of the kindness of their little billionaire hearts. They're doing so because they're making a lot of money doing it," said Rep. Aisha Gomez, DFL-Minneapolis, the co-chair of the House taxes committee. "These companies generate billions of dollars through ad sales, yes, but increasingly through data mining—tracking every little thing each of us are doing when we're on the internet."
An estimate from the state's revenue department predicts 15 social media companies would be impacted and the surcharge would bring in about $340 million in revenue over the next four years at a time when Minnesota is staring down a $6 billion deficit in the near future.
Opponents of the measure
caution it could violate a federal law
that prevents a tax on internet access or any excessive tax on e-commerce. They also told the tax committees in both chambers Wednesday that it could psuh companies to change course in the state.
"This could lead companies to scale back free or widely used services like Gmail, Google Maps, YouTube and Facebook, tools Minnesotans rely on every day for connection, work and community engagement," said Kouri Marshall with the Chamber of Progress, a trade group representing tech businesses.
Republicans rejected the tax hike and blamed Democrats for the last two years of spending for the looming deficit, arguing the only reason DFL lawmakers are looking at revenue raisers at all is to plug that hole. They have long contended that the state's taxes are too high.
"When you spend more than revenue you have coming in, it's unsustainable. It's simple math and that, members, is why we have a tax increase in front of us," said Sen. Jeremy Miller, R-Winona.
This isn't the first time the Minnesota Legislature has targeted social media companies. There have been
bipartisan efforts
in the past to put guard rails on the platforms for children in particular and the algorithms on the sites. Sen. Ann Rest, DFL-New Hope, said this proposal could make Minnesota a model for other states.
"What if we did this — no Minnesotan would pay, not one — and we reduced income taxes by $340 million over the next four years. Who would you rather be paying and participating in that — all of you or social media platforms?" said Rest, the tax chair in that chamber.
The legislation faces an uncertain future at the capitol, though, since in order to pass it will require bipartisan support. The House is tied so Republicans and Democrats will have to work together — along with a DFL-controlled Senate and the governor — to pass the next two-year state budget.
Lawmakers have begun budget negotiations to put together a deal before the session ends May 19.
"What is your model maybe is to me an outlier — makes us an outlier as opposed to a model. And that wouldn't be the first time that has happened in this state in its tax policy," said Sen. Bill Weber, R-Luverne.