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December 10, 2009


Minnesota Rejects Wisconsin Legislative Income Tax Reciprocity Proposal


MADISON €“ Months after Minnesota Governor Tim Pawlenty ended the income tax reciprocity agreement with Wisconsin, and Governor Jim Doyle had declared the issue dead, Wisconsin legislative leadership took extraordinary action to try and reach a deal with Minnesota.


Since both Governors walked away from the negotiating table in September, State Representative Ann Hraychuck (D-Balsam Lake) and State Senator Sheila Harsdorf (R-River Falls) took an active role in persuading Wisconsin legislative leadership to intervene. 


“Income tax reciprocity is an important agreement that helps tens-of-thousands of border crossers each year,” said Rep. Hraychuck.  “While Wisconsin legislative leadership was prepared to go into special session with an offer that was equitable to both states considering our current fiscal challenges and was actually better than Minnesota’s last offer to Wisconsin, Minnesota turned its back on the offer.”


Wisconsin legislative leadership offered accelerated payments and interest in a December 9th meeting that included Rep. Hraychuck, Sen. Harsdorf, key Wisconsin legislative leadership representatives, and Minnesota Commissioner of Revenue Ward Einess.


Minnesota has still not passed their state budget, and just last week they learned that their budget deficit has increased by $1.2 billion.  According to Commissioner Einess, this was the driving force behind Minnesota declining the most recent proposal.   


“This long-standing agreement should not have been scuttled for short-term budgetary gain as it was,” said Sen. Harsdorf. “While I am greatly disappointed in both Governors for failing to reach agreement months ago, I am heartened for the future of reciprocity because our state’s legislative leaders took unprecedented action to try to make this work.”


Wisconsin and Minnesota have had a tax reciprocity agreement since 1967. The reciprocity agreement has allowed residents who live and work in the two different states, to file a single tax return in their home state.  Since there are more than twice as many Wisconsin residents who work in Minnesota, Wisconsin then reimburses Minnesota for the income tax it collects.


Rep. Hraychuck and Sen. Harsdorf expressed hope that once both states have new governors in 2011 they can get back to the table and restore a common-sense agreement that benefits taxpayers of our region.