Gov. Mark Dayton is again proposing an income tax on people who spend 60 or more days a year in the state.
Dayton argues that "snow birds," people who spend the winter in warmer climates, use the same services everyone else pays for and should be required to pay their fair share. The governor's proposal would require them to pay a prorated portion of their income taxes in Minnesota.
Under current law, only those who live in Minnesota for more than six months of the year must pay state income taxes. Changing the law would generate $15 million a year, according to state Department of Revenue Projections.
But some say the tax is a horrible idea that stands to drive away long-term visitors and the money they spend in Minnesota.
One who would stay away is 58-year-old Bruce Carlson, a resident of Washington state. Carlson grew up in Minnesota and still spends about four and a half months a year at his lake home in the Brainerd area.
If Dayton's proposal to tax people who spend more than 60 days in Minnesota but less than the six months which trigger residency, Carlson will find somewhere else to vacation.
"If I'm going to be limited to less than 60 days in the state, there's no way that I can justify having property there in the first place," said Carlson, who splits his visits between summer and winter. "It just doesn't make any sense."
“If I'm going to be limited to less than 60 days in the state, there's no way that I can justify having property there in the first place... It just doesn't make any sense.”Bruce Carlson, Washington resident
If Carlson stops vacationing in Minnesota, he said the state will lose a lot of his money in property taxes and registration fees on his boats, snowmobiles and cars. But he also would not hire Minnesotans to fix up his cabin or take his dock and boat lifts in and out of the lake. He wouldn't spend money at Brainerd area restaurants or other businesses.
Given the competition between states over tourism dollars, Carlson said Dayton's proposed tax is ludicrous, and that it would cost the state much more than the money the governor's budget estimates.
"This is foolhardy," Carlson said. "My hope is... that it is just making some political points and will be withdrawn at some point because the outcome is obvious."
Brent Gunsbury, who owns Baxter-based Bercher Design and Construction, agreed that the snowbird tax would be bad for business.
"It could have a devastating effect," said Gunsbury, who does work for vacation property owners. "There's no question about it."
Gunsbury said it's short-sighted to scare away people like Carlson and all of the money they spend in Minnesota.
"Why take away all of that income that comes into this area and other areas through Minnesota that helps support the people ... the cleaners, the lawn care people," Gunsbury said. "It just goes on and on as far as the list goes for people who are employed by people who own second homes."
Dayton is sympathetic to such worries. He doubts his plan will make it through the Legislature unless concerns about potential lost business can be addressed.
The governor said he's not trying to drive away long-term vacationers but instead wants to force people who skirt the six-month residency trigger, to pay their fair share.
"If you're going to be here for five months and 29 days using all the services that all the rest of us pay taxes to support, then you ought to pay a proportionate share for doing so," Dayton said. "To me that's just simple fairness."
Minnesota Revenue Commissioner Myron Frans is trying to find a way to impose a snow bird income tax that won't hurt businesses that cater to seasonal visitors.
"Maybe we need to change the timing a little bit so is there some other way to come up with a rule that really requires people to pay their fair share, that's not too burdensome and doesn't drive people away and yet really gets at this fairness issue," Frans said.
No other state has sought to impose prorated income taxes on non-residents. Some critics claim it's unconstitutional. But Frans insists it would be legal and cites a Minnesota Supreme Court ruling that, as long as taxation is based on physical presence, it is permissible.