House lawmakers weigh proposed 'wealth tax' on assets over $10 million

Shoring up the state’s finances by raising taxes on the wealthiest among us is an idea whose time has come and gone and come again.

Both the federal and state governments have gone through periods during which tax rates rose for those with the highest incomes. But Rep. Aisha Gomez (DFL-Mpls) believes that measurements of “wealth” have changed enough that the state should take a different approach.

So the “wealth tax” she proposes in HF4616 moves beyond taxing according to income level and establishes a 1% tax on all “taxable wealth” over $10 million.

In this case, “taxable wealth” would be the sum of a taxpayer’s real or personal, tangible or intangible property based in Minnesota, minus the sum of all debts and financial obligations owed by the taxpayer. The value of property would be calculated in the same manner as for the federal estate tax.

The House Taxes Committee laid it over Tuesday for possible omnibus bill inclusion.

“What we have right now is an economy based on tech and on financialization of everything,” Gomez said. “And we have a tax system that’s outdated when you look at its ability to actually raise revenue from the way the economy is developing. This is an attempt to right-size that.

“We already do tax wealth. We tax the wealth of working class and middle-class people every single year. Because most of us, the one asset that we own is a home. Every year, they assess the value of my asset, they apply a classification rate, we have a levy that’s imposed and I pay a wealth tax on my one asset. … All we’re saying here is that the wealth of the rich should be taxed just the same as the wealth of middle class and working class people.”

The Revenue Department estimates that about 5,600 taxpayers would be subject to the wealth tax each year, and that the bill’s changes would increase the General Fund by $288.3 million in Fiscal Year 2027, with that total increasing by about $2 million annually in ensuing years.

While DFL members spoke favorably of the bill, Republicans dismissed it as unworkable.

“The ‘tax the rich’ mantra has been going on forever,” Rep. Mike Wiener (R-Long Prairie) said. “When these are put in place, people find inventive ways of getting around them. We lose high earners, who can simply move. And the tax burden falls upon the middle class.”

“The reason people can’t afford their lives is because they’re being taxed to death,” said Rep. Kristin Robbins (R-Maple Grove).

But Rep. Michael Howard (DFL-Richfield) portrayed the bill as a message to those struggling in the current economy that “wealth inequality is a stain on our state and our country and we’re going to do something about it.”