Taxpayers will give 24,000 fellow Minnesota residents $8 million for working in Wisconsin.
A new law provides Minnesotans tax credits beginning because income taxes they owe to Wisconsin for working there are higher than if they worked in their home state. On agreement between the states, known as tax reciprocity, used to do the same, with Wisconsin footing the bill.
The tax credit “will help these workers keep more of their hard-earned money,” Sen. Jeremy Miller, R-Winona, said.
The new law follows a decision nearly a decade ago by then-Gov. Tim Pawlenty to dump the agreement with Wisconsin in which the Badger state reimbursed Minnesota for higher taxes paid in that state by Minnesotans. Wisconsin was millions of dollars behind in payments, so Pawlenty ripped up the agreement.
Since then, negotiations between the two states have not gone well.
“Working with Wisconsin, you might as well be talking to a stump,” Minnesota House Tax Chairman Greg Davids, R-Preston, told Forum News Service earlier this year.
So he wrote a bill that his colleagues passed, and Gov. Mark Dayton signed as part of an overall tax bill, allowing the state to pay Minnesotans working in Wisconsin $8 million to compensate for the neighbor state’s higher income taxes.
Minnesota Tax Commissioner Cynthia Bauerly has notified Wisconsin that her department no longer plans to negotiate a tax reciprocity deal.
Wisconsin Public Radio reports that Revenue Secretary Rick Chandler is not happy with Minnesota’s action. He said
that he had made an offer to Minnesota to repay the state’s debt, but it came after Minnesota lawmakers passed their tax bill.
“A new agreement would have made tax filing more convenient for tens of thousands of Minnesota and Wisconsin residents by allowing them to file one state tax return rather than two,” Chandler said.
In the letter, Wisconsin offered to make quarterly payments of $25.25 million to Minnesota next year to catch up on unpaid debt. Chandler also proposed to annually pay Minnesota after that.
One of the major reciprocity provisions, as Chandler mentioned, was allowing residents of either state to just pay income taxes to one state. Minnesota’s new law does not change the need to file two state tax returns.
Low- and middle-income Minnesotans were especially helped by reciprocity. Wisconsin taxes that are higher than in the Gopher state on lower incomes, and while the deal was on the books they paid the lower taxes. Minnesota taxes are higher for those with bigger incomes.
The state continues existing tax reciprocity agreements with Michigan and North Dakota, neither of which involve much money.
Western Wisconsin legislators have worked to restore reciprocity since Pawlenty made his decision, urging their state to pay up and to negotiate with Minnesota.
Walz looks statewide
Some Minnesota political observers say Tim Walz has the inside track on the Democratic governor nomination because he can attract rural voters, but many others point to his lack of a statewide constituency that other candidates can claim.
The southern Minnesota congressman, who is beginning the public part of his campaign, certainly is well known in his district, but not so much in other parts of the state. Several other candidates in the already-crowded 2018 field have spent more time traveling the state.
Take, for instance, expected candidate Attorney General Lori Swanson. If looking at raw numbers, she has done better statewide than anyone else in the race.
Or Rebecca Otto, who also has won statewide.
There are two representatives who have held top state House leadership roles, which meant a lot of travel to all parts of Minnesota: Erin Murphy and Paul Thissen.
Even St. Paul Mayor Chris Coleman has traveled statewide for the past few years, often meeting with city leaders about issues they hold in common.
Only Rep. Tina Liebling of Rochester joins Walz in lacking significant statewide experience.
Walz needs to attract the heavily Democratic urban voter base, which leans liberal, while winning the more conservative rural voters.
Forum News Service Reporter Nathan Bowe quoted Walz during a recent Detroit Lakes visit: “The Grand Canyon gap between rural Minnesota and the Twin Cities is a false concept.”
While most in the Twin Cities-heavy bevy of candidates look for connections with rural Minnesota, which is credited with elected a Republican-controlled Legislature, Walz already appears rural oriented.
He supports mining in the Iron Range and is a strong supporter of gun rights, consistently earning top scores from the National Rifle Association, Bowe reported.
Walz said he is not a “tree hugger,” but believes in common sense environmental policies.
“Rural folks, just like city folks, want to work hard and have a good life for their children,” he said.