Bill Summary

• Eliminates the "foreign operating corporation" classification and replaces it with a broader "domestic corporation" definition that includes corporations incorporated in tax havens or with significant tax haven operations/assets.

• Establishes a list of 34 designated tax havens (including Cayman Islands, Panama, Bahamas, etc.) that trigger domestic corporation status, with exemptions if the U.S. enters into tax information-sharing treaties with those jurisdictions.

• Repeals provisions allowing foreign operating corporations to avoid Minnesota taxation and eliminates deemed dividend treatment for foreign operating corporations, effective for taxable years beginning after December 31, 2011.

• Increases individual income tax rates, adding a new top bracket of 10.85% for income over $1,000,000 for all filing statuses, and adjusts all income bracket thresholds upward.

• Changes inflation adjustment baseline from 1999 to 2011 for future tax bracket adjustments.