Minnesota and WWCR
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Whats WWCR? That's "worldwide combined reporting." The open letter provides this illustration:
For example, imagine Widget, Inc. sells 1 million widgets in Minnesota with a profit margin of $100 each. Instead of paying Minnesota taxes on $100 million in profits, they instead incorporate a subsidiary in a lower-tax jurisdiction and place their intellectual property in that jurisdiction.
The foreign subsidiary then charges the U.S.-based company $90 per widget for use of its IP.
The U.S.-based Widget corporation now records just $10 million of profits in Minnesota.
WWCR would require Widget, Inc. to calculate a single tax base that incorporates each taxpayer’s income and expenses, regardless of where they are located. Minnesota would then tax a share of that combined tax base based on the portion of the group’s sales that occurred within the state. Because all of the related taxpayers’ income and expenses are included in this combined tax base, intercompany transactions like intellectual property leasing do not affect the final calculation. This voids the Widget. Inc. group’s ability to shift income.
What do our fellow Minnesotans have to say about whether Minnesota should adopt WWCR?
