Mark Dayton, who has made “tax the rich” his gubernatorial campaign mantra, in the near future probably won’t be making any fundraising trips to Naples, Fla., or any other Southern destinations where Minnesotans spend winters.
In a recent expansion of his “tax the rich” campaign, Dayton has said that he wants to tax all those wealthy Minnesotans who head to warmer climes during the long winters.
“I would ensure that anyone who spends significant time in Minnesota pays Minnesota taxes,” Dayton was recently quoted as saying. He, along with Matt Entenza, is challenging the DFL’s endorsed candidate, Margaret Anderson Kelliher, in the August primary.
Dayton may have a catchy idea that may appeal to many of us who can’t do anything but shiver through our winters.
But it’s also one of those campaign ideas that’s easy to talk about but not so easy to pull off. Even Dayton’s campaign staff says it is more a “concept” than a policy promise.
The problem is pretty simple: If you’re one of those people who spends 183 days in Florida, Texas or Arizona, then you can simply declare yourself a resident of one of those low-tax states. And if, for instance, you’re a Floridian, you have no legal obligation to pay Minnesota income taxes.
It’s difficult coming by reliable numbers on who (and how many) might be gaming the system, as well As where people are going, why they’re going (warm weather or hospitable tax policies). As a result, there are no real estimates of how much revenue Dayton believes could be collected.
“There have been vague estimates on the number of snowbirds in places like Florida and Arizona,” said Tom Gillaspy, the state’s demographer. “But they’re not all from Minnesota. It’s easier to make an estimate about how many people are in a state than where they came from.”
There are, Gillaspy notes, two types of winter-flight folks:
• There are the “snowbirds” who leave Minnesota for a few months every winter. But they remain Minnesota residents, he says.
• And there are those who leave the state for 183 days or more. They likely are Floridians, Texans or Arizonans, who only return to visit Minnesota in the warm months.
“If you spend seven, eight or nine months there [in the Southern, low-tax states] you really are no longer a Minnesotan,” Gillaspy said.
So how do you tax ’em on a Minnesota scale, as Dayton seems to be proposing.
“If you’re going to benefit from our services,” said Brian Klaas, Dayton’s policy director, “then you should pay at the same rate as everyone else.”
But if a person is legally a Floridian how can you make him or her pay taxes in Minnesota?
This is, Klaas explains, a “concept” that is still on the drawing board. He suggests that a proportional system might be set up. For example, if a former Minnesotan is legally a Floridian but spends the three summer months in Minnesota, then that person could pay taxes based on the actual amount of time spent in Minnesota.
Klaas went on to explain that there already are laws on the books to nab “cheater” who claim to be residents of low-tax states but who actually aren’t spending the required 183 days in that other place to establish legal residency. The Dayton campaign believes those residency outlaws aren’t being pursued aggressively enough by the Department of Finance.
The department does audit people it suspects may be trying to cheat on residency.
According to Kit Borgman, a spokeswoman for the department, those under suspicion are “typically asked to provide documentation that includes such thing as where they hold a driver’s license, where their vehicles are registered, where they are registered to vote and actually do vote, the location of their civic and religious affiliations and membership in clubs, where they file tax returns and homestead a residence, where they work or conduct business, the location of their financial and banking relationships and the number of days spent in Minnesota and other states during the years in question. The exact documentation required varies according to whether it is an issue of domicile or physical-presence residency.”
In other words, Minnesota is doing some of what Dayton says he’d like to do. And it would be very difficult — perhaps even legally impossible — to do the rest of what he says he’d like to do.
But it all sounds good on the campaign trail.
Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.