Our View: Bring back reciprocity
In October, a headline read “Revenue head holds out little hope for quick return of tax reciprocity.” In this week’s edition, a headline reads “Income tax reciprocity talks reopened with Minnesota.”
Talks broke down late last year as Minnesota demanded $6 million to reinstate the program and Wisconsin Revenue Secretary Richard Chandler called it a “ransom.”
This summer, Minnesota Department of Revenue Commissioner Myron Frans sent a letter to Chandler to reopen talks.
According to the letter, the amount Wisconsin pays each year to equalize the tax effects would be reduced by $1 million, but only if the new agreement is entered into by Sept. 30.
Though it’s doubtful that a $1 million discount will be enough to sway Chandler into Frans’ agreement, hopefully it will act as an opening serve in a volley toward an eventual agreement.
About 56,000 Wisconsinites and 24,000 Minnesotans have had to file dual tax returns — one in each state — since 2009 when former Minnesota governor Tim Pawlenty cut off the 40-year-old agreement.
Nobody likes filling out tax returns, probably not even tax accountants. For those who live and work on opposite sides of the St. Croix River, filling out federal, Wisconsin and Minnesota income tax returns can be a costly and headache-filled endeavor.
As each state takes a different approach to taxation — Minnesota is hiking taxes and Wisconsin is cutting them — the revenue divide between the states is underscored.
It’s unclear whether Minnesota’s aggressive tax policy will cause residents to migrate into western Wisconsin, but it’s unlikely their jobs would migrate with them.
The contrasting policies create an even bigger rift as more opt to live in Wisconsin and commute.
There’s no problem with that; just don’t force them to fill out tax returns in both states.