Posted at: 03/22/2013 10:34 AM
Gov. Mark Dayton's plan for an income tax on snowbirds is generating heat from people who say it could wind up driving out long-term visitors.
Right now, only people who live in Minnesota more than six months of the year have to pay state income taxes. Dayton would extend that to anyone who spends 60 or more days a year in Minnesota, raising an estimated $15 million a year, although even the governor himself has expressed doubts that the proposal can pass.
The governor says it's a matter of fairness - that anyone who uses the same service everyone else does should pay their fair share. His proposal would prorate the amount they have to pay.
But some people say the tax is a bad idea that risks driving away long-term visitors and the money they spend in Minnesota, Minnesota Public Radio reported.
That includes Bruce Carlson, a native Minnesotan who now lives in Washington state. He returns to the Midwest to spend about 4½ months a year at his lake home in the Brainerd area.
Carlson, 58, said he would find somewhere else to vacation if the snowbird tax goes through. He called it foolhardy.
"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 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.
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.
"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 said he understands such concerns, and is doubtful himself the plan will pass unless the concerns about potential lost business are addressed.
Dayton acknowledged at a town hall meeting in Duluth Wednesday that his proposed snowbird tax hike "probably isn't going anywhere." But he said he proposed it to make a point. "Those folks use our roads, they use our services," he said.
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.
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