Closing Corporate Tax Haven Loophole Would Generate $36.5 Million in the Next Biennium
FOR IMMEDIATE RELEASE: April 2, 2013
Contact: Greta Bergstrom, 651.336.6722, greta@takeactionminnesota.org
CLOSING CORPORATE TAX HAVEN LOOPHOLE WOULD GENERATE $36.5 MILLION IN NEXT BIENNIUM
Minnesotans Call On Legislators to Pass H.F. 1440/S.F. 1237 Calling It “Smart, Fair and Popular Public Policy”
St. Paul, MN – On the first day back at the Capitol following the spring recess, members of the small business, farming, and policy communities called on state legislators to close corporate tax loopholes which would bring in over $350 million in new revenue to the state, over half of Minnesota’s current $627 million budget deficit. In particular, speakers support passage of H.F. 1440/S.F. 1237 which would prevent corporations from hiding Minnesota income in foreign tax havens.
State Representative Frank Hornstein (DFL-Minneapolis), House sponsor of H.F. 1440, said the Minnesota Department of Revenue “estimates that the bill would bring in $36.5 million in tax revenue during the next biennium. This is much needed revenue to invest in the people of Minnesota, including
our schools, care for our seniors and rebuilding our public infrastructure.”
The legislation would close tax haven loopholes by treating certain tax haven corporations as domestic corporations. The bill would prevent these entities from shifting Minnesota income to their subsidiary foreign corporations thus avoiding paying Minnesota’s corporate franchise tax. In turn, closing the tax
haven loophole would prevent cost-shifting to other state taxpayers or further reductions in to public services and infrastructure. The bill was first heard in the Senate tax committee in late March. State Senator Scott Dibble (DFL-Minneapolis) is the bill’s Senate sponsor.
According to recent data from the U.S. Public Interest Research Group, Minnesota currently leads the nation in terms of per capita state and federal income tax revenue lost through the corporate tax haven loophole. Speakers at Tuesday’s news conference said that it was imperative that the House and Senate tax committees work to eliminate tax preferences that unfairly benefit large corporations at the expense of small businesses, agricultural research and investment in the state.
Heidi Marty, co-owner of a small manufacturing business based in Orono, Minnesota, said closing corporate tax loopholes “will help level the playing field for small business owners who are currently at a competitive disadvantage with larger corporations.” Marty said state legislators have a responsibility to close these loopholes as a matter of fairness “because too often, public policy favors large corporations, and that’s certainly the case with the tax haven loophole.” Small businesses with one-hundred or fewer
employees, represent 98% of all businesses in Minnesota. Collectively, these small business employers are the state’s largest employer.
Paul Sobocinski a farmer from Wabasso, Minnesota and a policy organizer with the Land Stewardship Project said closing the tax haven loophole, along with other corporate tax loopholes “is about fairness and reducing tax inequities and wealth disparities around our state.” Sobocinski said many important state programs that benefit small farmers and agricultural research have been cut or underfunded as a result of lagging revenue. “The choice is clear. Continue giving unfair tax breaks to big corporations or invest in the people of Minnesota.”
Jeff Van Wychen, Senior Policy Fellow and Director of Tax Policy & Analysis at Minnesota 2020 said “the bill closes a loophole that gives large multinational corporations an unfair competitive advantage over smaller businesses.” A new research piece up this morning on www.mn2020.org website, Closing the Corporate Tax Haven Loophole, provides an in-depth analysis of U.S. PIRG data from The Hidden Cost of Offshore Tax Havens: State Budgets Under Pressure from Tax Loophole Abuse. Van Wychen is
supportive of H.F. 1440/S.F. 1237 and believes “closing this loophole is an obvious step when attempting to close the current budget deficit.”
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TakeAction Minnesota is a statewide people’s network of individual and organizational members working collaboratively to raise the voices of Minnesotans in their own communities to advance social, racial and economic justice. The organization
