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View from around the state: Strike a deal on tax reciprocity

Once again, there will be no early Christmas present for more than 80,000 people in Minnesota and Wisconsin this year.

The revenue department grinches from both states are once again holding these people hostage because the two states cannot yet agree on the terms to restoring tax reciprocity. Oct. 1 was the deadline to get anything done for 2014 income taxes payable in 2015.

That means commuters who work in another state have to file income taxes twice and pay income taxes in two states. It affects about 56,000 Wisconsin residents who work in Minnesota and about 24,000 Minnesota residents who work in Wisconsin, including nearly 3,000 residents of Houston County who cross the river to work in Wisconsin and about 2,500 Wisconsin residents who do the same in Winona.

The reciprocity agreement the states had for 41 years was canceled in 2009 when the states couldn’t agree on the timing of payments and Wisconsin was in arrears. That occurred because more people live in Wisconsin and work in Minnesota and Wisconsin’s taxes are higher.

The states have agreed that Wisconsin should pay Minnesota about $69 million annually, but the agreement has stalled because Wisconsin offers full credit for taxes paid to other states. Minnesota limits its credit and wants an additional $6 million from Wisconsin to compensate for this difference. Wisconsin has refused.

Wisconsin Secretary of Revenue Richard Chandler said he wants to get reciprocity back in place but said the additional $6 million is a sticking point.

“I call it a ransom,” Chandler said while speaking recently to business leaders in La Crosse. He said Minnesota is asking Wisconsin taxpayers to fund a tax increase imposed on Minnesota taxpayers.


But Minnesota Secretary of Revenue Myron Frans says it’s up to Wisconsin to pay its fair share.

“Legislators support it (reciprocity), and the governor would like to see it happen, but no one is willing to do it unless it’s a fair deal for Minnesota, and that’s going to require Wisconsin to agree to the terms that we provided,” Frans told the St. Paul Pioneer Press earlier this fall.

It’s frustrating to be this close. Six million is a drop in the bucket for state budgets of more than $100 billion. Legislators from both sides of the river want this to happen.

So, to paraphrase Larry the Cable Guy, it’s long past time to git ‘er done.

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