Bracing for Higher Taxes Under Budget "Repair" Bill

Late Wednesday night through early Thursday morning, many of my colleagues and I in the Assembly fought against a bill that is expected to raise taxes in Wisconsin by more than $312 million over the next four-and-a-half months and $1.2 billion over the next two-and-a-half years.  More than 50 amendments were introduced to strip the proposed tax increases from the bill, all of which were rejected by the majority party.  In the end, Senate Bill 62, the budget repair bill, passed the Assembly by a vote of 51-48 despite bi-partisan opposition.  The bill also passed the Senate earlier in the day on Wednesday with an 18-15 vote.  Governor Doyle signed SB 62 into law on Thursday afternoon.

The purpose of the budget repair bill is to fix the $600 million budget shortfall the Legislature is anticipating by June of this year.  In the midst of the worst economic climate we’ve experienced since the early 1980s, I am very disappointed with the “yes” vote cast by the majority of my colleagues to raise taxes on their struggling constituents and businesses.  One of the proposals in SB 62 that concerns me the most is establishing combined reporting for corporate income taxation in Wisconsin.  A complex tax policy, combined reporting will basically require multi-state businesses based in Wisconsin to pay taxes on the income they earn in other states.  Including combined reporting, under Governor Doyle’s budget and budget repair legislation, Wisconsin businesses will face an 11% increase in the taxes they pay to the state over the next two years.

Southeastern Wisconsin will especially be affected by combined reporting because of how attractive the area is at this time to Illinois businesses affected by their state’s combined reporting laws.  I was informed by the Kenosha Area Business Alliance that implementing combined reporting in the economy we are currently experiencing would prevent their members from recruiting other companies to keep and expand their businesses.  Kenosha is home to a number of small businesses and manufacturers that are engaged in multi-state operations and the combined reporting proposal could hinder their ability to succeed in this difficult economic climate.  Furthermore, this proposal would make our entire state less competitive for business investment and job creation and jeopardize the expansion of existing businesses.  As we struggle to get our state economy back on track, this proposal simply takes us in the wrong direction.

The one victory that Wisconsin taxpayers came away with in the budget repair bill includes three economic stimulus provisions that I believe will benefit our state’s businesses during these difficult times they are facing.  The provisions are the Early Stage Investment Program, the Dairy Cooperative Manufacturing Facility Investment Tax Credit, and the Meat Processing Facility Tax Credit.  These are the incentives we need to offer our businesses to encourage reinvestment, growth and expansion, and, most importantly, job creation.  I believe these proposals are a good start, and I hope my colleagues and I can do even more to help the business community create more jobs throughout the duration of the budget process in the Assembly.

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