UPDATE: Business group wants legislature to eliminate state's top income tax bracket
MADISON (WKOW) -- Officials at the state's top business lobbying group say Wisconsin's top income earners deserve a tax break and the idea is attracting interest from some influential state lawmakers.
Wisconsin Manufacturers and Commerce (WMC) is pushing to eliminate the state's top income tax bracket of 7.65 percent, a rate paid by individuals earning $240,190 per year or more and married couples earning $320,250 per year or more.
If eliminated, the highest rate would be just 6.27 percent, which WMC believes would attract more businesses to Wisconsin.
Rep. Amy Loudenbeck (R-Clinton) tells 27 News she hears all too often that taxes are too high from constituents in her Assembly district along the Illinois state border.
"Our high tax climate and the reputation that we have in Wisconsin is still hurting us from an economic development standpoint," said Rep. Loudenbeck, who will sit on the Joint Finance Committee (JFC) that will be in charge of delivering a state budget next spring.
Rep. Dale Kooyenga (R-Brookfield) also sits on the JFC and crafted a tax cut passed during the last budget session. He says Wisconsin simply can't compete with states like Illinois, where the top tax rate will drop to 3.5 percent next year. Rep. Kooyenga says that's an important difference because a majority of small business owners file taxes for their businesses on personal income tax returns.
Rep. Loudenbeck says even when companies do locate on the Wisconsin side of the border, their executives often choose to live in Illinois for tax reasons.
"So, we can incent all we want to get the businesses to locate here, but where people choose to live is definitely partially driven by the tax climate in the state they choose to call home so, we have to be cognoscente of that," said Rep. Loudenbeck.
But how to pay for such a change is a tough question no one seems to have a firm answer for right now.
By WMC's own estimates, scrapping the top tax rate will reduce state revenues by $250 million dollars per year. Rep. Loudenbeck and Rep. Kooyenga say the answer lies in budget cuts.
"I think we're all trying to look for ways to make government more efficient and ways that we can streamline and not affect service delivery at the state level," said Rep. Loudenbeck.
But Todd Berry, President of the Wisconsin Taxpayers Alliance, says that could be easier said than done, especially since the state faces a projected budget deficit of $2.2 billion by mid-2017.
"This state has had round after round after round of budget crises, so, in some respects the low-hanging fruit has all been picked," said Berry,
That means some creative budgeting might have to take place in order to turn the idea into a reality.
The state's current top tax rate was set during the last budget cycle in 2013. Prior to that, there was a top rate of 7.75 percent set by former Governor Jim Doyle and a Democratic controlled legislature in 2009, which raised it up from 6.75 percent.
MADISON (WKOW) -- Wisconsin's top business lobbying group wants the legislature to eliminate the state's top income tax bracket as a way to stimulate more economic growth.
Wisconsin Manufacturers and Commerce (WMC) proposes eliminating the top bracket of 7.65 percent. That is the rate currently paid by individuals who earn $240,190 per year or more and married couples who make $320,250 per year or more.
If eliminated, the highest bracket would then drop down to 6.27 percent or a different rate that could be set by the legislature.
WMC cites the fact that Wisconsin's top-tax bracket is the tenth highest in the country and is discouraging more entrepreneurs from locating or expanding here.
Rep. Dale Kooyenga (R-Brookfield), who sits on the Joint Finance Committee, says the proposal is one the legislature must "seriously consider" in its 2015-17 budget discussions to compete with other states.
WMC estimates eliminating the top bracket would cost the state roughly $250 million in revenue. Rep. Kooyenga said that could be made up with other tax adjustments and spending cuts. Capitol Bureau Chief Greg Neumann will have more on this story on 27 News at 5 and 6.
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