Committee advances tax break for apprenticeship tuition

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A state Assembly committee gave a favorable recommendation this week to a bill that would give workers and employers a tax break on apprenticeship tuition.

The proposal, Assembly Bill 45, would give a tax break to workers or companies that pay tuition for apprenticeships recognized by the Wisconsin Department of Workforce Development. Under current, law some forms of tuition are tax-deductible, but not money paid for apprenticeships.

AB 45 was passed unanimously by the Assembly Committee on Workforce Development on Tuesday.

The bill’s co-author, Sen. Andre Jacque, R-DePere, said he’s hopeful that the bill will make its way through the Legislature before the current law-making sessions wraps up.  A similar proposal was put forward last year and approved by the full state Assembly only to fail to get a vote in the Senate.

“A lot of folks would like to see it move forward. We’re certainly hopeful,” Jacque said. “The philosophy is, we shouldn’t be treating apprenticeship tuition differently than we treat college tuition.”

The proposal has drawn support from a number of construction industry groups, including the Associated Builders and Contractors of Wisconsin and the Wisconsin Builders Association. Three union groups — including the North Central States Regional Council of Carpenters — have meanwhile taken a neutral stance on it.

According to a fiscal estimate published in March, there were about 13,600 apprentices in Wisconsin in 2018. If AB 45 is adopted, employers and workers who pay apprenticeship tuition would be able to start claiming tax credits in 2020.

Fewer than half of the apprentices in Wisconsin, about 6,200 people, were enrolled at Wisconsin technical colleges in 2018, according to the fiscal note. Altogether, they paid about $4 million in tuition, an amount coming to about $640 for each student. The remaining 7,400 students who were enrolled in private apprenticeships paid about $2,000 each in tuition last year.

The Wisconsin Department of Revenue, assuming a marginal individual tax rate of 5%, estimates that the proposed tax break would cost the state about $940,000 in lost revenue yearly. The agency notes, however, that businesses pay taxes at a higher rate: 7.9%. So the bill could have higher costs if a large number of businesses were to take advantage of it.

The bill is one of a number of proposals aimed at curtailing Wisconsin’s shortage of skilled tradespeople. In November, the Wisconsin Senate advanced a bill that would set up a $100,000 grant program to help people in apprenticeship programs pay for clothing, tools and other gear needed on the job. Follow @natebeck9