A key to a competitive economy is a competitive tax code, and Wisconsin has made improvements in recent years. The manufacturing and agricultural tax credit is making Wisconsin even more attractive for investment in these two key drivers of our economy. Recent income tax reductions and reforms to the state Alternative Minimum Tax have helped lessen the burden. However, Wisconsin remains among the highest-taxed states. WMC believes Wisconsin needs to take bold action to make the state’s tax climate more competitive to attract and retain both businesses and a talented workforce.
Taxes & 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 and phasing out or eliminating the tax will make Wisconsin a more competitive place to do business.
Repeal the 2009 tax hike that created the top individual income tax bracket of 7.65 percent. Reduce the 7.9 percent corporate income tax rate to keep Wisconsin’s tax regime competitive for pass-through entities and corporations alike.
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.
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.
Taxes & Spending
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