The release of the Panama Papers by the International Consortium of Investigative Journalists just a few weeks ago has shaken the international political world to its core. In short, the Panama Papers revealed that many heads of state and politicians are avoiding taxation in their country of residence by storing large sums of money in “off-shore” tax havens. The political and economic fallout has been widespread, and has prompted many elected officials to act. In Minnesota, multiple DFL legislators have authored a bill to close a loophole that corporations utilize to avoid paying the state’s corporate tax.
DFL Rep. Frank Hornstein (Minneapolis), one of the authors of the bill, conveyed in a press release that HF 3898 is seeking to accomplish the following: “This legislation will ensure that any Minnesota corporation with property, payroll, and sales here is paying Minnesota corporate taxes, even if they have subsidiaries in these 46 countries or territories to which they’re shifting revenue.”
Most importantly, the legislation will end the shifting of corporate revenue by amending Minnesota statute 290.01 to clarify what a “Domestic” corporation is, and by labeling 46 identified “tax havens.” The passage of the bill would mean that no longer would it be legal for corporations with “property, payroll and sales” in Minnesota to transfer revenue to subsidiaries to avoid taxation. Some of the most notable countries on the “tax haven” list in the bill are Aruba, Belize, the Bahamas, Panama, and the U.S. Virgin Islands.
Hornstein argues that corporations avoiding taxes is harming the state, “We need to call out companies that are moving money abroad simply to avoid tax payments and ask them if they think we should have good schools, health care, and infrastructure, or if lowering standards of living in Minnesota is their intended goal.”
The bill is likely to be controversial, considering that a recent study conducted by the Center for the American Experiment, and reports by Alpha News show that Minnesota is witnessing its’ wealthiest individuals leaving the state, and taking their wealth with them in pursuit of lower-taxed states.
The bill has received its initial reading, and has been delegated to the House of Representatives Tax Committee for further consideration. Subscribe to Alpha News to continue to be updated on all things related to Minnesota politics.