Minnesota’s New GOP Leadership Renews Hope for Tax Reciprocity

Wisconsin’s tax reciprocity deal with Minnesota ended in 2009 after a 40-year agreement left Minnesota losing money on the deal. Currently, businesses that operate in both states must file tax returns in both states.

Minn. GOP House leadership brings renewed hope for stalled tax reciprocity talks

Northland News Center, December 1, 2014

Bill Stack heads up a Superior-based company that provides heavy-duty equipment for industrial jobs.

The company serves both Duluth and Superior, which Stack says has been nothing short of taxing on payroll.

“It’s become cumbersome, and we’ve consistently told the government that. We’ve told them it’s difficult to do business in both states,” said Stack, the owner of Stack Brothers Mechanical.

It’s been that way since former Minnesota Governor Tim Pawlenty cut tax reciprocity in 2009. Pawlenty had asked for a new deal that would accelerate payments to Minnesota. Wisconsin’s administration at the time rejected the deal.

“We have to tell the software that this employee has worked four hours today in Wisconsin, four hours today in Minnesota, we have to break his time cards apart, we have to cut two separate checks, for the week that the employee that he’s worked in both states,” Stack said.

Minnesota and Wisconsin have been unable to reach an agreement to restore the decades old deal, creating double the work for not only businesses like Stack’s, but 80,000 workers who cross state lines.
But now with Republicans taking control of the Minnesota House in 2015, Wisconsin officials say there is renewed hope.

“We would hope the new legislature on a bipartisan basis would see the importance of this issue and make a change and accept our offer,” said Wisconsin Revenue Secretary Rick Chandler.

“I think there is agreement that we would really like to get this back, and it’s more than just lip service,” said Sen. Roger Reinert (DFL-Duluth).

The sticking point remains: Minnesota wants an additional $5 to $6 million to make up for a tax increase imposed on tax payers after the reciprocity deal ended in 2009.

Secretary Chandler says Wisconsin shouldn’t be held accountable.

“We think it’s a good thing for Minnesota taxpayers, but we don’t think Wisconsin taxpayers should have to pay to reverse that tax increase,” Chandler said.

Wisconsin’s July offer would have increased payments to Minnesota 29 million dollars over the 2009 rate.

That offer fell flat.

“We’re willing to consider almost anything Wisconsin will bring forward other than nothing,” said Sen. Reinert.

Employers and workers hang in the balance as another tax year goes by with no deal in place.