Legislators Look to Modernize Wisconsin’s Industrial Classification System

Representative Bob Kulp and Senator Howard Marklein have recently circulated a bill to move Wisconsin off the Standard Industrial Classification System (SIC) and to the North American Industrial Classification System (NAICS).  This would modernize how Wisconsin determines which business sectors are subject to certain regulatory and tax regimes.

The SIC system was created in the 1930s but has not been updated since 1987. The advance of technology has fundamentally changed how some industry sectors operate and created whole new sectors of Wisconsin’s economy since then. However these industries do not always easily fit into classifications meant to describe a 1980s economy.

LRB 1460/1 would transfer Wisconsin from SIC to NAICS. NAICS codes were created by the federal government in collaboration with Canada and Mexico in 1997 to replace the SIC with more comprehensive and up-to-date system that could be used across borders. NAICS also has one other benefit over the SIC, a mechanism for regular updates. Many state governments have adopted NAICS as a replacement to the SIC. Aligning Wisconsin with the federal government and other states will make it easier for companies to do business in Wisconsin by reducing the administrative burden of using SIC codes when dealing with Wisconsin’s government while using NAICS does when dealing with other governments.

This bill has the potential to broaden industries eligible for certain tax incentives such as the Manufacturing and Agriculture tax credit. The bill will finish circulating next week and introduced shortly thereafter.