Taxes & Spending
Wisconsin has made important improvements toward lowering the tax burden on businesses, homeowners, and citizens. The manufacturing and agricultural tax credit is making Wisconsin even more attractive for investment in these two key drivers of our economy. However, Wisconsin remains among the highest-taxed states in the country, and many of our neighbors have more competitive tax rates. WMC supports the following reforms to reduce the tax burden facing Wisconsin families and employers.
Taxes & Government Spending
Protect the tax credit that has allowed two pillars of Wisconsin’s economy, manufacturing and farming, to thrive. Since its implementation, the MAC is responsible for the creation of over 42,000 jobs (2017 numbers) and a higher manufacturing jobs growth rate than neighboring states.
Local governments have asked the Legislature to prohibit the use of physically comparable vacant properties as comparable sales to occupied properties for property tax assessment purposes. The result of this policy would allow tax collectors to more subjectively assess property value, and taxes, as well as to make it harder for businesses to challenge their tax bill.
Local governments are attempting to make Wisconsin a national outlier in the way we assess property taxes by including the value of financing agreements, such as triple-net leases, as real property for property tax assessment purposes. This would lead to significant property tax increases on Wisconsin businesses and create a disincentive to create or expand businesses in the state.
This annual double tax on property is both costly for businesses to comply with and difficult for government to administer. The Legislature took the first step towards eliminating this tax during the 2017-19 budget. Finishing the job by eliminating the tax, which none of our neighbor states impose will make Wisconsin a more competitive place to do business.
Follow the lead of pro-growth states and create certainty for taxpayers by capping the top individual income tax rate in the state constitution so the top rate can be cut – but not raised.
States with no income tax have seen their gross state product grow faster than states with an income tax, in addition to no-tax or low-tax states experiencing positive in-migration. Repeal of the personal income tax will make Wisconsin’s business climate instantly more competitive in the Midwest, help address worker shortages, and unlock Wisconsin’s economic potential. In the absence of eliminating the income tax, Wisconsin should reduce and flatten the rate to remain competitive with other Midwest states that have lowered rates and enacted other tax reforms.
Limit the growth of Wisconsin’s property tax burden, currently the fifth highest in the nation, by placing the current property tax levy limit standard in the state constitution, which limits the ability of local governments to increase property taxes while allowing for reasonable increases for new development.
Wisconsin’s R&D credit has historically been used to incentivize high-tech, good-paying jobs to Wisconsin. However, it has lost its efficacy due to net operating losses carried or incurred by many companies during the great recession and an increasing number of states making their credit refundable. Making Wisconsin’s R&D credit fully refundable will ensure our state can compete for these jobs in the future.
Enact an income tax credit that would partially offset property taxes paid on buildings used for agricultural production.
Update the manufacturing property classification list, prohibit the state from contracting with third-party auditors, conform unclaimed property laws to national best practices, provide clearer guidelines for sales tax reporting, modernize the dividends received deduction, and eliminate the disparity between interest paid on underpayment of taxes and tax refunds.
Federal tax reform incentivized businesses to invest in capital improvements and provided tax relief to pass-through entities. Conforming Wisconsin’s tax code to these federal provisions will incentivize capital investment in the state.
The Wisconsin state legislature should enact measures to prohibit such abuse of taxpayer dollars. Using taxpayer money to lobby in favor of higher taxes is inappropriate, and is an abuse of local governments’ responsibility to use finite resources wisely.
A competitive tax climate is a necessary component to promoting a strong economy. WMC will oppose any increases in tax rates or burdensome tax regulations that make Wisconsin’s business climate less competitive.
The size and scope of government should be limited to avoid unsustainable spending that often drives future tax increases. Our state budget should avoid raids on dedicated funds, maintain a healthy reserve and budget stabilization fund, and dedicate surplus revenues to tax relief for the taxpayers to whom it rightfully belongs. The state should outsource those functions which can be accomplished more cheaply and efficiently by the private sector, and eliminate instances where taxpayers subsidize competition against private sector businesses.
If you would like to learn more about our stance on criminal justice and legal reform or have questions, contact Evan Umpir, WMC’s Director of Tax, Transportation & Legal Affairs.
Taxes & Spending
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