MADISON – Wisconsin Manufacturers & Commerce (WMC) – the combined state chamber and manufacturers’ association – thanked members of the Joint Committee on Finance for adding a bold set of tax reforms to the state’s budget plans.
On Thursday, Wisconsin’s budget-writing committee released a plan that provides a substantial income tax cut, expands the Research & Development Tax Credit and repeals the personal property tax – all major priorities for Wisconsin employers. All together, the plan would cut taxes by $3.4 billion.
In response to the plan, WMC General Counsel and Director of Tax, Transportation & Legal Affairs Cory Fish released the following statement:
“When it was announced that the state budget would have a nearly $6 billion surplus, WMC called for substantial tax relief – and that is exactly what Republican leaders in the legislature did. Not only will the average family save roughly $1,200 over the next two years, Wisconsin businesses will be in a better position to attract and retain talent while investing in their future. WMC and the business community thank Sen. Marklein and Rep. Born for introducing these bold tax reforms and strongly urge Gov. Evers to keep them in the final version of the budget.”
Personal Property Tax – Full Repeal
The personal property tax is charged on the value of certain “personal property” of businesses, from phones to forklifts. It is one of Wisconsin’s oldest taxes and over the last 170 years, the legislature has created a myriad of exemptions resulting in uneven enforcement, frequent audits and litigation. For many small businesses, complying with the recordkeeping costs associated with the tax can be more expensive than the tax itself. States including Iowa, Illinois, Michigan and Minnesota have already repealed this tax. This plan would fully repeal Wisconsin’s personal property tax – saving businesses across Wisconsin $200 million in addition to the hefty compliance costs.
Learn more about the personal property tax by clicking here.
R&D Tax Credit – Refundability to Expand from 10% to 15%
One way to both alleviate businesses’ tax burden while attracting highly-skilled workers to the state is to revitalize Wisconsin’s Research & Development Tax Credit. The R&D Tax Credit is structured in a way that it requires continued growth and investment in Wisconsin. However, due to its current largely non-refundable structure and economic circumstances, the R&D Tax Credit has become nearly useless to many companies looking to invest in R&D activities in Wisconsin. This plan expands the refundability of the R&D Tax Credit from 10 percent to 15 percent, which will allow businesses to invest more in highly skilled and highly paid talent here in Wisconsin.
Learn more about the R&D Tax Credit by clicking here.
Individual Income Tax – Third Rate to be Cut from 6.27% to 5.3%
Wisconsin’s individual income tax is one of the highest in the country. This not only makes the state less attractive to people who may move to Wisconsin, it hurts the majority of small businesses who pay the individual income tax as pass-through entities. By lowering the third bracket – which covers income from $23,930 to $263,480 under the current levels for a single filer – Wisconsin will be on better footing to recruit talent, while also helping small businesses invest more into their companies and communities.