May 19, 2010
Minnesota Refuses Tax Reciprocity Benchmark Study
Last year, Minnesota withdrew from the longstanding income tax reciprocity agreement with Wisconsin. While such interstate agreements are the responsibility of the Governors, Legislators from both states scrambled to pressure and present alternatives as opposed to ending the 41 year-old agreement.
During legislative discussions last fall, there was recognition that the two states needed to update the benchmark study that determines how many workers are crossing the river from one state to the other in order to calculate the payment from Wisconsin to Minnesota. In an effort to keep the issue alive and ensure a fair framework for future negotiations, lawmakers from both states agreed to work to pass legislation calling for a benchmark study.
While the Wisconsin Legislature passed such legislation, which the Governor signed into law, it was disappointing to hear that the Minnesota Legislature failed to do so prior to the end of their session. Minnesota officials expressed that they didn’t want to “create false hope” that income tax reciprocity would be restored any time soon.
Income tax reciprocity is one of a number of joint agreements held between our two states which serve to enhance relations and build opportunities for our citizens. While I have expressed my disappointment with Wisconsin Governor Doyle on this matter for not negotiating aggressively to maintain the agreement last year, Minnesota’s signal this week that they won’t even move toward the framework for future agreements is extremely disappointing.
Both states will be electing new Governors this November. The Governors are charged with negotiating such agreements. Lawmakers and affected citizens must work to convince both Governors to come together to negotiate and reinstate the income tax reciprocity agreement.
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