Ignore Whitespace should also ignore whitespace inside of lines as well
"if (foo)" is semantically the same as "if ( foo )" but the diff counts those as changes when ignore whitespace is on.
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psantosl commented
Well, semantic doesn't work at this level. It doesn't consider semantic diffs inside method blocks.
That being said, for C# there's an option to ignore "format changes" as the one you propose. Check http://blog.semanticmerge.com/2014/05/skip-format-conflicts-with-new.html