Unemployment advantages are most well-liked via tax breaks as this creates pressure

A proposed tax break for people who lost their jobs and accumulated unemployment during the COVID-19 pandemic got a boost on Wednesday – but also in lawmakers’ recurring party line conflicts.

While Bill SB-267 was introduced by the Democrats, it was passed 3-2 on Wednesday by the Senate Labor and Regulatory Reform Committee, with both Democrats on the committee voting against.

The legislation would waive state income taxes in 2020 and 2021 for the first $ 10,200 unemployment benefits a taxpayer receives in either year.

With the passage of the bill from the committee, “I really hope it’s scheduled for Tuesday” – on May 11th, when the Senate will hold its next session, its author, Senator Tim Carpenter (Milwaukee, D-Milwaukee) said on late Wednesday afternoon.

The bill is urgent to pass, Carpenter said, so it can be immediately applied to state income tax returns due on Monday, May 17.

The reason for the split vote in committee on Wednesday was an amendment tabled by Senator Steve Nass (R-Whitewater), chairman of the committee. The change renewed the ongoing conflict between GOP lawmakers and Democratic Governor Tony Evers over who can decide how the state’s COVID aid funds should be spent.

The wet amendment instructs the governor’s office to use up to $ 242 million of the state’s share of the money under the American Rescue Plan Act (ARPA), enacted in March, to cover lost tax revenues from the unemployment benefit tax break.

The Evers government has abided by state law that gives the executive sole control over the issuance of federal dollars that are distributed to the state. Meanwhile, GOP lawmakers have repeatedly passed laws that would allow them to override Evers’ plans for the state’s $ 3.2 billion ARPA allocation. Evers has vetoed these attempts.

When Nass added his amendment to the bill providing a tax break on unemployment benefits, Democrats were initially cautious because the language in ARPA prevented states from cutting taxes and using federal funds to offset lost revenue.

The U.S. Treasury Department, which has not yet issued guidelines for states on ARPA spending, issued a statement in early April declaring an exception to this restriction. According to the statement, states are allowed to use the money to replace revenue from “income tax changes that merely bring a state or territory’s tax law into line with recent changes to federal income tax law.”

The proposed state tax break for unemployment benefits corresponds to a change ARPA made to the federal income tax law. Because of this, it would not be a violation, according to an email memo an impartial Legislative Council attorney sent to some lawmakers in April to cover the taxes enacted by ARPA.


Despite this memo, Sens. Bob Wirch (D-Somers) and LaTonya Johnson (D-Milwaukee) voted against the amendment, which was accepted 3-2 in committee. They also voted against the bill after the amendment was passed.

In a statement on Wednesday, Wirch said the original bill had “brought much-needed relief to families hard hit by the pandemic,” many of whom have sought help from his office following the loss of COVID-19 jobs since early 2020.

But Wirch called the amendment a “Republican trick” that was “reprehensible”. Because formal treasury guidelines have not yet been released, ARPA funds “have not yet been approved for this use and may never be,” Wirch explained. He accused the amendment of seeking “a” gotcha “for Democrats and Governor Evers”.

When asked about Wirch’s characterization, Nass said in a written statement on Wednesday evening: “I can only assume that Senator Wirch has not read the e-mail from the bipartisan Legislative Council and the US Treasury Department’s guidelines on the ARPA funds and SB 267 Otherwise, some Senate Democrats seem unwilling to help struggling taxpayers if it means upsetting the governor’s staff. “

Carpenter, meanwhile, said Wednesday that despite the amendment, “I’m glad the bill is moving forward.”

As before, Carpenter spoke well of Nass because he held a public hearing on the laws in April and pushed it forward with the vote on Wednesday. He said he appreciated that Nass showed him the amendment before it was introduced.

“I don’t call it a poison pill to kill the bill. But it certainly makes things very complicated,” Carpenter said. “I’m in the minority – deeply in the minority. And all I can do is try to work with the Republican majority.”

While hinting at more cynical interpretations of the GOP maneuver, he kept hopes open for a bona fide dialogue.

“I’m concerned that if they put the amendment in place just to delay things and delay things, they wouldn’t do that,” Carpenter said. “But if they are interested in seriously discussing people and taking care of them, to federalize the treatment of their unemployment benefits, I think exercise is good.”

He contrasted the treatment of the proposed unemployment benefit tax break with a bill passed in February granting recipients of federal Paycheck Protection Program (PPP) funding an additional reduction on their state business taxes. The Republican majority in both the Senate and the Assembly opposed changes to this law that the Democrats introduced to introduce an income tax break for unemployment benefits.

The PPP tax break worth $ 400 million or more is covered by general state revenue.

“And I would hope the unemployment benefit is the same,” Carpenter said. “But the bottom line is: think of the people who were unemployed and have a hard time. I hope that people will remember that and not get involved in partisan politics.”

He said he hoped his bill would be rescheduled quickly so that it could be added to Tuesday’s Senate calendar.

“We can have a discussion on the change in the Senate,” Carpenter said. “But I really hope it’s scheduled for Tuesday and maybe we can work something out with the governor’s office and with the Republicans.”

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