Latest news with #DFL-NewHope
Yahoo
3 days ago
- Business
- Yahoo
Rank-and-file reject Minnesota legislative leaders' ‘skinny' tax bill
Dark clouds loom over the Minnesota Capitol on May 15, 2025. Photo by Michele Jokinen/House Public Information Services. Senate Taxes Chair Ann Rest, DFL-New Hope, didn't need much time to shoot down the 'skinny,' 12-page tax bill proposed by Minnesota legislative leaders as they rush to button-up a two-year budget deal, without which the state shuts down at the end of the month. 'I rejected it right off the bat,' Rest said in an interview Monday. 'As soon as I saw it, I told them I couldn't vote for that and neither could half a dozen other Senate Democrats.' The text of the bill was posted on Sunday, but Rest said it's been obsolete since Friday morning when she expressed her opposition and asked that they continue working toward a deal. Rest's rejection raises the prospect of a two-year budget agreement without a tax bill, which isn't necessary for ongoing government operations but would leave a bevy of lawmakers and interest groups fuming, their hopes for special tax treatments foiled. The 12-page document largely maintains the status quo with a couple notable exceptions agreed to weeks ago: increasing the sales tax on cannabis 50% and repealing the electricity tax exemption for power-hungry data centers. Those will still be in any final package, Rest said, but the 'skinny' bill leaves out noncontroversial but nevertheless important policies. For instance, more than a dozen cities are awaiting approval for local tax increment financing districts aimed at spurring development. The skinny bill also leaves out continuing tax credits for sustainable aviation fuel, which has bipartisan support but was was absent from the leadership agreement signed off by Gov. Tim Walz, Speaker Lisa Demuth, R-Cold Spring, Speaker Emerita Melissa Hortman, DFL-Brooklyn Park, and Senate Majority Leader Erin Murphy, DFL-St. Paul. Republican co-chair of the House Taxes Committee Greg Davids of Preston also unequivocally rejected the proposal in an interview with MPR News. 'We put five months of thought into something they put five minutes of thought into, and I know which one's going to be better,' Davids said. 'I'm just not sure why any Republican would even consider voting for this. I don't think it would pass (the) House or the Senate.' While the taxes working group was meeting in public, negotiations have moved behind closed doors and will likely remain so until a deal is reached, Rest said. Building trade unions and business groups are banking on lawmakers extending sales tax exemptions for data centers on equipment purchases even as they sunset exemptions on electricity. They hope by extending the equipment sales tax exemption into the next century, the state will entice Meta, Amazon and other tech giants to build data centers in Minnesota. The tax incentives are particularly important to the construction unions after lawmakers failed to reach an agreement on a public infrastructure package for the second year in a row. Building one large data center can cost upwards of $1 billion — more than an entire public infrastructure package — and create upwards of 1,800 construction jobs, according to a study of Wisconsin. Opponents argue that tech giants will build data centers in Minnesota regardless of the tax incentives leaving regular taxpayers to subsidize some of the richest companies in the world at the expense of investing in schools, nursing homes and infrastructure. The state expects to bring in an additional $56 million in tax revenue over the next two years by repealing the electricity exemption. The state will still exempt data centers from sales tax on equipment and software through 2042, which is expected to cost more than $200 million in forgone sales tax revenue over the next two years. Amazon recently announced that it's suspending plans for a large data center in Becker 'due to uncertainty' — one week after lawmakers announced they were eliminating the sales tax exemption on electricity. Lawmakers have also agreed to raise the tax on retail cannabis sales from 10% to 15%, pushing the total sales tax above 20% across the state when local and state sales taxes are added. The tax hike would land before the state has even issued any cannabis sales licenses, although it has been collecting taxes on THC beverages and low dose edibles. Just one dispensary would be subject to the tax increase: The White Earth Nation opened its first off-reservation store in Moorhead last month after negotiating a compact with state leaders through a process exclusive to tribes. State lawmakers voted to legalize cannabis in 2023 with a relatively low sales tax compared to other states, arguing that a higher tax would allow the black market to survive, and that cannabis sales should not generate funding for unrelated budget items. The 15% rate would push Minnesota toward the higher end of taxes compared to the 23 states with legal cannabis sales, according to the Tax Foundation. The bill would also repeal a law that sends a fifth of cannabis tax revenue to cities and counties to fund local enforcement costs.
Yahoo
22-04-2025
- Business
- Yahoo
Social media companies are like tobacco companies; tax their products for their harms
(Photo by Nicole Neri/Minnesota Reformer) If you are sick of big tech's creepy data collection and invasive advertisements, then you might like a new bill, authored by Senate Taxes Committee Chair Ann Rest, DFL-New Hope, proposing a tax on data collection by large social media platforms. By assessing a flat rate as well as additional per capita fees on social media platforms with over 100,000 monthly users, SF3197 would raise an estimated $137 million in 2026-27 from the 14 largest platforms operating in Minnesota. Like efforts to curtail multinational corporate tax avoidance in 2023, this is an important and innovative idea that would once again make Minnesota a national leader in creating a stronger and more equitable tax code. Democratic lawmakers registered enthusiastic support during initial hearings, with pointed criticisms of an exploitative industry. House Ways and Means Chair Zack Stephenson, DFL-Coon Rapids, and Sen. Grant Hauschild, DFL-Hermantown, likened the data mining tax to taxes on smoking and mineral extraction, respectively. Hauschild went so far as to describe social media platforms as leeches, and he's not off base. In 2024, for example, Meta made $62 billion in after-tax profits on $164 billion in revenue for an astounding 42% profit margin. Out of $69 billion in net revenue, they paid just $8.3 billion in taxes for an effective tax rate of 12%. These earnings don't result from new value or innovation in the traditional sense, but from attention-seeking business models that create addictive behavior among users while generating few jobs and little in socially productive economic activity. Multiple scientific studies have found social media use is strongly associated with increased rates of mental health challenges like depression, anxiety and disordered eating, especially among children and adolescents. Social media advertising models have also contributed to the degradation of our information ecosystem, which is an essential pillar of democracy. The southwest Metro and southeastern Minnesota lost 10 local newspapers last April alone, all replaced with nothing other than Facebook rage and viral conspiracy theories. In my testimony on the bill, I explained how the policy could be described as a Pigouvian tax — a tax levied on a socially harmful activity in hopes of reducing its prevalence and/or raising revenue to compensate for its deleterious effects. Big tech is increasingly leveraging in-depth user knowledge to extract maximum profit. To allow these practices to proliferate with minimal regulation is bad enough, but to do so without any fiscal compensation is simply foolish. A tax on data mining is especially important in the case of social media platforms because they offer their services for free, in exchange for access to consumer data, which is then monetized through the sale of advertising. Economists describe this as a barter — you give them lots of data about yourself, and in exchange they let you scroll for free — and policy experts have written on the importance of taxing such transactions, both to discourage the rampant acceleration of hidden extraction, and so that the public can benefit from growing industries in which traditional monetary transactions don't occur. To put it in simple terms: The Zucks of the world are enriching themselves by pumping us full of free content that comes with high hidden costs. The new tax would act as a limiter, or at least a compensator, for those hidden costs. Similar to the discussion around sales tax exemptions, there is a fairness argument for businesses here as well. According to the Department of Revenue, businesses pay nearly half of all state sales taxes, but not all industries incur the same sales tax liabilities. White collar and other intangible services are generally not subject to sales taxes while many tangible goods are. A parallel pattern plays out in the broader economy: If growing online industries generate substantial profit based on the value of consumer data, but consumer data is not taxable, then these industries have an inherent advantage over others, even if those others provide more socially productive goods and services. That's a lot of reasons to celebrate. None of these arguments will persuade influential business groups to support the idea. With an evenly split House, any tax increase will face a difficult path to becoming law. Initial objections by the business-funded Council on State Taxation follow a familiar pattern — using legalese and overly complex language to grant an air of authority to their arguments that boil down more simply to 'our wealthy funders don't want to pay taxes.' But while many of these points are in bad faith, Minnesota would be the first state to pass this policy, and there are implementation questions as well as a guarantee of court challenges, which have arisen over similar policies in Maryland. Legal challenges will arise, not because it is illegal or unjustified, but because large tech firms have the money and incentive to fight tooth and nail against any new tax. This is what happened with digital ad taxes in Maryland, but advocates there have cleared significant hurdles, and the state is collecting tax revenue in the meantime. There's something deeply undemocratic about this strategy of legal obstruction, and Minnesota shouldn't be deterred. As bad news goes, that's not the worst. The data mining tax, though certainly worthwhile, is the result of a politics that sees taxes as a punishment that should be heaped only on the wicked. I am all for taxing extractive practices, but those sorts of policies won't get us anywhere near the revenues we need to avoid looming cuts to education and disability services, let alone mitigate the damage wrought by impending federal budget cuts. The real revenues we need will require raising taxes on a larger swath of Minnesota residents and businesses — something politicians on both sides of the aisle are very reluctant to do. In tax policy circles, there's a phrase used to describe this dynamic. 'Don't tax me, don't tax thee; tax the man behind the tree!' In other words, everyone wants a tax that raises revenue from someone else. And that's the exact sort of thinking we are seeing here, as fingers point to a handful of large companies with poor reputations that are nowhere near the primary culprits of our top heavy economy. In New York, for example, a similar bill created a rate and fee structure much the same as this one, but applied it to all data collection, not just that by social media platforms. That policy design brought in banks, credit card companies, cell phone providers, and more. That would raise considerably more revenue and much more meaningfully crack down on unfettered data collection as a business model. But it would seem that even those major industries didn't make for a clear enough villain for Minnesota legislators this time around. Furthermore, and somewhat ironically, some of the same senators that railed impressively against social media platforms are also moving to potentially expand tax breaks for data centers run by some of the very same companies impacted by the social media data mining tax. I think they mean well, and I can understand the desire to attract new high-paying jobs. But the contrast reveals that we are still in need of a deeper attitude adjustment around taxes. Taxing online enterprises is essential to the state's long-term budgetary stability, so I am glad we are starting the conversation. In a bad budget year, it's refreshing to see legislators fighting to make more profitable corporations pay their fair share. But this policy is not on par with our revenue needs. We can't just find someone we don't like and tax them. We have to agree to tax ourselves because it's the only way to create a more effective government and humane society moving forward.
Yahoo
09-04-2025
- Business
- Yahoo
Minnesota Republicans skeptical of DFL's proposed new tax on social media
WASHINGTON, DC - JANUARY 20: Facebook CEO Mark Zuckerberg arrives for the inauguration of U.S. President-elect Donald Trump in the U.S. Capitol Rotunda on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th President of the United States. (Photo by Kenny Holston-Pool/Getty Images) Republicans in the Minnesota Senate and House on Wednesday were unconvinced by Democrats' proposal to implement a first-in-the-nation tax on social media companies that collect data on Minnesotans, arguing the costs of the comparatively small tax on the nation's largest corporations that earn billions annually would eventually trickle down to middle-class Minnesotans. The bill, chief authored by Senate Taxes Committee Chair Sen. Ann Rest, DFL-New Hope, would impose an excise 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 — the new tax on social media is among the ideas. Under the bill (SF 3197), the largest social media companies — those that have over 1 million Minnesota consumers — would be taxed $165,000 per month, plus 50 cents times the number of consumers over 1 million. The Department of Revenue estimates the tax would apply to 14 social media companies. The tax would begin in January 2026 and 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. Republicans on the Senate Taxes Committee said the new tax would hurt Minnesota businesses. Local businesses advertise on social media, and platforms like Facebook and Instagram would pass on the cost of the tax onto Minnesota businesses, said Sen. Bill Weber, R-Luverne. 'Quite frankly, if you don't believe that the cost of their advertising is going to go up as a result of a new tax, I think you're kidding yourself. It is going to be a cost to Minnesotans at the end of the day,' Weber said. Rest on Wednesday acknowledged that the bill will likely lead to litigation, as companies could interpret the legislation to be in violation of the Internet Tax Freedom Act, which prohibits state and local governments from imposing taxes directly on internet access or online activity. University of California Davis School of Law Professor Darien Shanske, who studies digital taxation, testified that Minnesota would have a strong case. 'It would be inappropriate for legislatures to give up on sound tax policy in the face of novel legal arguments that will ultimately be defeated,' Shanske told the Senate Taxes Committee Wednesday. Courts have generally ruled in states' favor in disputes over revenue generators, he said. Even as social media companies make hundreds of billions of profit, social scientists are sounding the alarm on the widespread use of the apps, especially by young people. Democrats on the Senate Taxes Committee framed the tax as one worth fighting for, resembling sin taxes on tobacco and alcohol. Sen. Grant Hauschild, DFL-Hermantown, compared the social media tax to state taxes on mining. When you mine the earth, Hauschild said, companies pay taxes so people in the area can benefit from social services funded by mining taxes. The same should be done for social media, he argued. 'These are leeches on our society. Leeches that we have come to accept, but they are leeches nonetheless,' Hauschild said of the billionaires who run social media companies. 'There's no reason that we shouldn't, as Minnesotans, decide to fight the fight, take the legal recourse and try to tax these people who are benefiting most from us.' Versions of the bill were heard in both the Senate and House on Wednesday, and both were laid over for possible inclusion in a tax omnibus bill at a later date.
Yahoo
27-03-2025
- Business
- Yahoo
Cities and developers want state money to convert office buildings to housing, other businesses
Minneapolis Mayor Jacob Frey testifies on March 27, 2025, in support of a bill that would extend a state tax credit to projects that convert underutilized office buildings to residential or other commercial uses. Photo by Madison McVan/Minnesota Reformer. As the value of commercial buildings collapses in the wake of the pandemic, Minnesota city leaders want state help to convert underutilized buildings into housing or better commercial uses. Office towers that were once prime locales for blue chip tenants have been selling at massive discounts — 97% in one recent case — alarming city leaders who are forced to shift the tax burden to residents. There are already state and federal tax credits for the rehabilitation or conversion of historic buildings, but developers and city leaders want a bigger state tax credit — up to 30% of a project's cost, compared to 20% for the existing historic state credit — and to apply it to more buildings. The bill (SF768/HF467) does not require that the buildings be converted to housing to qualify for the credit. Instead, conversions qualify if they remake a commercial building for another commercial use that the building was not originally built to accommodate, or if at least half of the building has been vacant for five years, and the conversion 'will return that vacant area to an income-producing, habitable condition.' The credit — called the 'credit for conversion of underutilized buildings,' or the 'CUB credit' — would apply to buildings at least 15 years old. 'The CUB credit is not the silver bullet that will fix all of our cities' challenges,' said Sen. Zaynab Mohamed, DFL-Minneapolis, the bill's chief author. 'However, without it, many adaptive reuse projects in Minnesota simply will not move forward.' Any program that will cost the state money will have a difficult path to passage this year. The state is spending more money than it's bringing in, meaning lawmakers will look for areas to cut more than new programs to spend on. Senate Taxes Committee Chair Sen. Ann Rest, DFL-New Hope, said in a hearing Thursday that the bill as written is too expensive — a Department of Revenue analysis found it would cost between $20 and $25 million per year, with no cap on payouts. Mohamed said the program could be capped based on budget targets. Converting office buildings to apartments is complicated. Many office towers aren't structurally fit for housing: Some are so large that many apartments would lack windows, a dealbreaker for prospective residents. Others have exteriors made almost entirely of glass. Plumbing is often centralized — one floor may have one or two common restrooms, while apartments require many bathrooms spread across the floor. And while interest rates have dropped from their most recent peak in 2023, they're still well above the rates of the 2010s and the historic lows reached during the pandemic. Zoning rules can also present hurdles to redevelopment. Minneapolis changed its rules last year to eliminate some red tape for office-to-residential conversions, exempting developers from public hearings, extensive traffic studies and the city's inclusionary zoning ordinance, which requires developers to either include a number of affordable housing units or pay large fees to the city. Minneapolis Mayor Jacob Frey testified in support of the tax credit proposal. Commercial property values in Minneapolis have dropped by 9.5% over the past year, and the shrinking commercial tax base means an increased property tax burden on homeowners. Rest, a co-author of the bill, pointed out that commercial properties are taxed at a higher rate than residential properties, so conversions could reduce the tax rate on many buildings. Higher post-conversion property values would more than offset the lower tax rate, said Chris Sherman of Sherman Associates, a Minneapolis real estate developer that recently converted the historic Northstar Center East from offices to a mixed-use building with more than 200 apartments. The bill was laid over for possible inclusion in a larger tax bill.
