In the most aggressive move in the country, two Minnesota Democratic-Farmer-Labor (DFL) legislators sought this week to spotlight state finances of large corporations in their operations within the state. They want to make corporate state tax returns available on a public website led by Rep Emma Greenman of Minneapolis.
The proposed law specifies that corporations with gross national sales and receipts over $250 million in US currency must make the disclosures. The threshold applies to Minnesota’s most prominent economic entities, including the retail giant Amazon and big-box store Target.
“Disclosure and transparency are just good across the board when it comes to the biggest actors in our economy,” said Greenman. It’s really important that we, as lawmakers, show the public that we’re willing to be fair and transparent about the biggest economic actors.”
In a Pew research study, 60 percent of Americans said they were concerned that companies don’t pay their fair share of taxes.
But the bill’s outright abolition of the state’s tax haven law was met with intense opposition from the state’s business lobby and trade associations, which warned that public disclosure of corporations’ tax information would put them at risk from competitors and perhaps hostile foreign actors. “Why would any lawmaker want to punish homegrown Minnesota businesses and put them at a competitive disadvantage? There’s a reason no other state in the nation has passed a law like this,” Kurt Zellers, CEO of the Minnesota Business Partnership, told the committee, “Our lawmakers should never jeopardize our companies and their employees.”
Likewise, the Minnesota Chamber of Commerce questioned the bill’s legality, and Beth Kadoun, Vice President of Fiscal and Tax Policy with the Minnesota Chamber, stated: “This bill violates the long-standing principles of taxpayer confidentiality, likely runs afoul of federal law that prohibits states from releasing tax return information and undermines Minnesota’s competitiveness as other states do not require similar public disclosure of confidential tax return information,”
But even then, business interests did not have it all their way, as Greenman stated: “This is a piece of information, just disclosure. It puts no more burdens on these corporations, and I think it’ll be useful for policy-making, to the public, and for creating a fairer economy.”
Aside from the tax transparency bill, Democratic legislators are revisiting the prospect of applying worldwide combined reporting to corporations. Representative Mike Howard of Richfield recently sponsored a bill permitting the legislative auditor to prepare a special report on the impacts of implementing a tax regime requiring global profits of multinational corporations to be reported for tax purposes.
“Fundamentally, the idea is something a lot of Minnesotans support in terms of just the basic fairness, so let’s get the details right,” said Howard.
The bills on tax transparency introduced by Greenman and tax studies introduced by Howard are both scheduled to be heard by the House Taxes Committee, signaling that corporate tax accountability in Minnesota is back on the agenda.
In conclusion, although supporters of the proposed legislation believe that transparency is essential and will allow for a leveling of the playing field regarding corporate taxes, the exact realism of such goals remains to be determined. The friction between transparency and corporate interests highlights the complexity of the problem, and therefore, what will become of big companies after the new measures come into effect will depend on how this regulation is implemented and enforced.
Source: Michelle Griffith, Minnesota Reformer March 6, 2024
