Rice County Republicans

The Northwest Airlines (NWA) and Delta merger carries the risk of negative economic repercussions for Minnesota, the 2nd Congressional District and the Rice-Scott county BPOU area. The merger of the Eagan based carrier, and projected movement of the combined headquarters to Atlanta, will be a net economic loss for Minnesota.

While there are many business reasons for such a move, one factor that cannot be overlooked is the effect on state taxes on the decision as to where to locate a corporate headquarters. For example, if we just look at the state corporate tax rates for Minnesota verses Georgia you’ll see a great disparity in Minnesota’s 9.8% compared to Georgia’s 6.0%.¹ This relatively slight difference can literally translate to additional millions in liability for a company.

To add fuel to the fire, Representative Ann Lenczewski (D-40B) has proposed in H.F. 4103,² which lowers the rate to 8.8% but also eliminates many existing tax credits and deductions for out-of state and foreign royalties! This proposed ability to tax earning from around the globe is something Georgia’s tax code does not do.

Under this new regime just the NWA portion of the business, which in 2007 had world-wide accounts receivable of $776 million,³ could conservatively pay an additional $21,000,000 in state taxes by keeping the headquarters in Minnesota.

It is delusional to believe that anti-business friendly tax codes do not, and in the case of NWA may have already had, a negative economic impact on Minnesota. Not only does H.F. 4103 need to be defeated, but to remain competitive our state corporate income tax needs to be lowered, if not all together eliminated.

Stephen N. Kallestad
Northfield, MN