Home / Government / Walker signs tax cut bill into law (UPDATE)

Walker signs tax cut bill into law (UPDATE)

Associated Press

MADISON, Wis. (AP) — Companies that relocate to Wisconsin won’t have to pay income taxes for two years under a bill signed into law Monday by Gov. Scott Walker.

The measure joins three others Walker has signed in his first month in office that he said will send a message that Wisconsin is more business friendly. Walker, a Republican, has seen his legislative agenda speed through the Republican-controlled Legislature even though he has yet to explain how he’ll pay for everything in light of the state’s projected $3 billion budget shortfall.

Walker is expected to tout the early successes, and start talking about how he’ll tackle the budget, in his first State of the State address on Tuesday night. Lawmakers were scheduled to be back at work on Wednesday voting on more Walker priorities.

Even though the tax cut bill he signed Monday and other parts of his legislative agenda have garnered bipartisan support, Democratic critics say much of what Walker is doing is more symbolic than substantive.

For example, only $1 million in tax breaks are expected to be given out to qualifying businesses that relocate to Wisconsin under the bill Walker signed Monday. Another tax cut Walker is backing that’s tied to every new job created would come with a tax benefit of only between roughly $90 and $315 per job.

Even so, Walker argues the changes will improve the state’s business climate even as he faces the daunting task of balancing the budget. Aid to public schools, the University of Wisconsin system, local governments and Medicaid programs were all expected to be big targets for cuts in the budget Walker will release on Feb. 22.

For his first month in office, though, Walker’s been focused on spending money through tax cuts. Two tax cuts he’s already signed, along with one that’s passed the Assembly, would add roughly $117 million to the state’s budget problem over the next two years.

The $1 million tax cut bill he signed Monday takes effect this tax year and affects taxes due in 2012.

Companies that have not operated in the state for two years could essentially get their corporate and personal income tax obligation in Wisconsin erased for a two-year period. At least 51 percent of the workforce’s payroll, or at least $200,000 in wages, must be paid to the workers in Wisconsin in order to qualify.

Walker likened the tax break to a rental company that offers tenants a couple of months’ free rent.
“It gives us a foot in the door,” Walker said.

He also signed a bill Monday that increases by $25 million the money available for economic development incentives. However, there is already more than $73 million in tax credits in the fund that have not been allocated, so the additional $25 million is not expected to be tapped over the next two years at least.

Walker previously signed into law a bill that eliminates state income taxes on contributions made to health savings accounts, which comes with a $49 million price tag, and a sweeping lawsuit reform measure. Other parts of his legislative agenda are also moving forward quickly.

On Monday, the Legislature’s budget committee was meeting to pass a bill that reorganizes the state Commerce Department into a new corporation made up of private employees, not state union workers.

The new Wisconsin Economic Development Corporation would be focused solely on economic development, with regulatory duties shifted elsewhere in state government.

That bill was scheduled to be voted on Wednesday in the Assembly.

Two other Walker bills — giving the governor more power in the state agency rule-making process and clearing the way for a development near Lambeau Field — were also up for votes Wednesday in the Assembly.

The Assembly has already passed a $67 million tax break proposal tied to new job creation and a bill requiring a two-thirds vote, instead of a simple majority, to raise income or sales taxes.

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One comment

  1. “The measure is only expected to cost the state $1 million in tax revenue over the next two years.” What a load of ****. We all know that the state has a huge budget deficit. The $1million will be made up by passing it on to you and me.

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