Minnesota Officials Dissatisfied With Income Tax Reciprocity Offer From Wisconsin

Minnesota officials are not pleased with Wisconsin’s new income tax reciprocity offer, which is far lower than what Minnesota had requested that Wisconsin pay.

About 57,000 Wisconsinites work in Minnesota — more than double the number of Minnesotans employed in Wisconsin. Those workers have to file income tax returns in both states, a requirement that came to pass in 2009 after a decades-old tax reciprocity agreement ended between the states.

In the latest move to reach a new deal, Wisconsin is offering to pay Minnesota $87.3 million for the 2015 tax year. Minnesota, however, wants Wisconsin to pay $91.5 million.

Wisconsin Department of Revenue Secretary Richard Chandler said Wisconsin does not need to send Minnesota the additional money it’s requesting.

“If reciprocity were to go back into effect, it would mean a tax reduction for those Minnesota taxpayers,” said Chandler. “They’d pay less in taxes compared to what they’re paying now. Minnesota has said they want Wisconsin to send them a payment to make up for that difference in revenue collections in Minnesota.”

Minnesota Department of Revenue Commissioner Myron Frans said he’s disappointed in the latest offer. He said having more Wisconsinites working in Minnesota creates an imbalance and a revenue loss.

“The fact is, the effective tax rate for middle-income taxes in Wisconsin is a little higher, so that creates another imbalance,” said Frans. “It’s these imbalances that create a distortion in the revenue flow between the states under reciprocity, and that’s what Minnesota wants to be compensated for.”

A deal has to be reached by Sept. 30 in order to be in effect next tax year.