Capital Corner:  "Wisconsin is Open for Business"

Jim Brandenburg, CPA, MST, Shareholder - Tax   email | bio
December 2010

While Washington continues to sort out its new political make-up and leaves taxpayers in a seemingly perpetual state of uncertainty, let's look a little closer to home at what to expect in Madison next year. Scott Walker will be the new Wisconsin governor next month. Walker will also have political majorities in both the State Senate and State Assembly which should help him with his new growth agenda. From a tax standpoint, here are a few of the items Walker has talked about and plans to introduce to boost the State's economy. 

• Individual Income Tax Rates - Walker intends to remove the tax rate hikes enacted in 2009, and restore the rates in place back in 2008. Thus, the maximum tax rate would drop from 7.75 percent down to 6.75 percent.

• Combined Reporting - Also in 2009, Wisconsin adopted "combined reporting" for businesses to collect additional tax revenue. The separate company filing that existed before was disbanded. Walker has touted repealing the combined reporting provisions.

• Federal-Wisconsin Differences - Wisconsin, like many other states, has different tax rules than those that apply for federal tax purposes. Some of these differences include the treatment of Health Savings Accounts, bonus depreciation, and the "production deduction." It is likely these and other differences will be modified by the new Wisconsin legislature.

• Retirement Income - Wisconsin presently taxes the retirement income (IRAs, pensions and other retirement plan payouts) of Wisconsin residents. Walker has proposed that he would explore not taxing these retirement benefits, in hopes of recruiting residents back to Wisconsin who have moved out of state for tax reasons.

The above listing of items is by no means all-inclusive and other tax provisions will likely be introduced. The final details of any changes, as well as the effective dates, transition rules, etc. all need to work through the legislative process. Wisconsin, as with many parts of the country, has been impacted by the struggling economy.  Walker hopes the above tax changes will help get Wisconsin back on track by growing its economy and creating new jobs.