Raising Revenues by Increasing Corporate Income Tax

Every year, billions of dollars in state corporate income tax revenue are lost due to tax avoidance schemes undertaken by large, multistate corporations.  The Multistate Tax Commission estimates between $8.3 billion and $12.4 billion in state corporate income tax revenue was lost in FY 2001 alone because of efforts made by corporations to exploit loopholes in state tax laws.  It estimates the typical state lost 31.1 percent of its corporate tax collections in 2001 as a result of tax avoidance schemes. This bill would require Minnesota to adopt the practice of “combined reporting” to ensure these large, multistate corporations pay their fair share in income taxes.  Combined reporting is a tool for closing a corporate tax loophole that large multistate corporations exploit.  Combined reporting also has the advantage of leveling the playing field so the biggest corporations lose an advantage they have over smaller, in-state companies that end up having to shoulder a greater share of tax obligations because they lack the size and clout to make use of loopholes.