State officials call on Minnesota to accept tax reciprocity offer
Wisconsin has made a new offer to restore income tax reciprocity with Minnesota, so 80,000 people who work across the border can again file taxes with their home state instead of both.
The latest offer does not include the State of Minnesota’s request for an extra payment of up to $6 million. Wisconsin Department of Revenue Secretary Richard Chandler calls that unprecedented.
Still, Chandler and state lawmakers near the Minnesota border remain hopeful that the two states can reach an agreement by Sept. 30, so reciprocity can return in 2015.
Because more Wisconsinites work in Minnesota than vice versa, the Badger State used to make annual payments to make the arrangement financially equal for both states. Minnesota Gov. Tim Pawlenty cut off the 40-year arrangement in 2009 because Wisconsin was getting behind on its payments.
In a letter sent to Chandler on June 19, Minnesota Department of Revenue Commissioner Myron Frans proposed that income tax reciprocity between the two states be restored for the benefit of their residents starting with the 2015 tax year.
Minnesota says it’s been fair in the effort to bring it back, saying it cut $1 million a year from its previous request.
Wisconsin’s offer includes a payment of approximately $87.3 million to offset the revenue forgone by Minnesota due to the reciprocity program, which was calculated the same way as under the prior reciprocity agreement. Minnesota has demanded a payment of $91.5 million to subsidize their tax increases.
Statements about Wisconsin’s new reciprocity offer were released by Rep. Dean Knudson (R-Hudson), Rep. Erick Severson (R-Osceola), Rep. John Murtha (R-Baldwin) and Wisconsin State Senator Sheila Harsdorf (R-River Falls).
Wisconsin State Sen. Sheila Harsdorf (R-River Falls): “Today’s offer by Wisconsin to reinstate the income tax reciprocity agreement goes beyond meeting all the demands made by Minnesota when they ended the agreement in 2009. This proposal gives Minnesota all that they asked for and more with an annual payment of $87 million, accelerated payments, and higher interest rates.
“I call on Gov. Dayton and his administration to sign this agreement and restore the cooperative, neighborly approach our two states enjoyed for decades. Secretary Chandler and the Wisconsin Department of Revenue have met all of Minnesota’s demands when they ended the agreement in 2009. Now is the time to support our taxpayers and businesses on both sides of the river to reduce the burdensome requirements and higher costs imposed by the lack of reciprocity.”
Compiled by Jordan Willi