The Wisconsin Legislative and Financial Office (LFB) announced Tuesday that members of the Wisconsin State Assembly are working on a final decision on the state budget for fiscal year 2022-23 (FY) beginning July 1. Report The state has significantly more income than expected when the LFB published its sales forecast at the beginning of the year.
Specifically, LFB’s revised three-year earnings forecast is $ 4.4 billion higher than previously reported, $ 1.4 billion higher than forecast for 2021, and $ 1.5 billion higher in 2022 and 2023. Actual $ 1.4 billion higher. This brings the expected total surplus to US $ 2.6. It will be $ 1 billion in 2021, $ 3.9 billion in 2022, and nearly $ 5.9 billion in 2023. Those sales projections come from a combination of higher-than-expected collections this spring as the state turned the battle around the corner. COVID-19 (New Coronavirus Infection) and a significant amount of federal aid funded by the state, its local government and taxpayers received it during a pandemic. The federal aid is limited in time, but the state finance authorities expect strong revenue growth in the next few years.
Under current Wisconsin law, in years when actual tax withholding exceeds budget for the year, half of the excess revenue is paid into the state budget stabilization fund to prepare the state for future economic contraction. I can. At the end of fiscal 2021, the actual tax collection amount will be about $ 1.6 billion higher than the budget for fiscal 2020-21 when it was passed in 2019. This will automatically transfer approximately $ 808 million. Although it is a budget stabilization fund, the remaining surplus income in 2021 and the expected increase in historical income shares over the next two years can be used for the long-term interests of the current and future people of Wisconsin. , Must be used.
As always, there are many different opinions about the breakdown of these conventions, but tax cuts are well under discussion, which makes them sensible and economically efficient. It is important to consider how the conditions for further investment and growth can be created over the next few years.
Given the state’s revenue projections, options are being explored to return some of the excess revenue to taxpayers in a structurally sound manner while making Wisconsin more economically competitive. It makes sense. These suggestions, along with other suggestions, Wisconsin Tax Reform Option Guide ..
Reduce the personal income tax rate. Wisconsin’s highest personal income tax rate of 7.65% higher than any state except 9 states and the District of Columbia, and the second highest marginal tax rate of 6.27% is very high, with a single applicant’s taxable income of about $ 24,000 and a taxable income of one Pair of 32,000. When considering the impact of the maximum marginal tax rate, keep in mind that the sole owners, partnerships, LLCs, and other transit companies pay taxes under the state’s personal income tax system, so the state’s maximum marginal tax rate is high. Is important. 7.65% is a drag on many Wisconsin businesses, especially those about to close in the wake of a pandemic (and those who have closed but want to reopen in the future). Permanent cuts in the state’s high income tax rates, particularly 7.65% and 6.27%, have had a particularly negative impact on the state’s economic growth and have not been reduced in recent years despite the two lower tax rates. Must be top priority. It was reduced. An option for sustainable tax cuts beyond 2023 should be decided by the legislature. Tax Triggers As the state recovers from the pandemic, consider making future rate cuts, provided the revenue is still available.
Reduce and eventually eliminate the marriage penalty .. Ideal Income Tax Structure doubles the couple’s parentheses compared to a single filer so the tax rate is applied evenly, but with Wisconsin income tax, two people will marry. The effective tax rate is significantly higher when the couple submits the tax return together than when the individual submits the tax return. They earn a total income separately, but the same amount. In particular, the marginal income threshold in Wisconsin for couples is only about 33% higher than for single parents, but the marriage proposal threshold in most other states applies to couples. Is 100% higher. This marriage penalty departs from the neutrality of Wisconsin tax law, so policy makers should prioritize the gradual introduction of higher thresholds for married applicants.
We will lower the corporate tax rate. Like the personal income tax rate, the state corporate tax rate is very expensive. Only 13 states and DC have higher marginal tax rates than Wisconsin. This has made the state heavily dependent on incentives to attract new employers to the state, but unskilled workers have a high proportion of unskilled workers as the incentives are only available to certain skilled companies. It is carried by the perfect brunt. Lowering the state’s high corporate quota will increase employment growth, wage growth, higher returns for shareholders (including annuities and other individual retirement account holders), and more long-term investment and opportunity in Wisconsin. Will promote. Similar to the income tax reduction, future corporate tax reductions may be made depending on the availability of future income.
Abolition of the fallback rule. Wisconsin’s economic competitiveness is hampered by the existence of fallback rules that go beyond uncompetitive income tax rates and expose more corporations’ income to higher state corporate tax rates than states without such guidelines. I am. Multiple Study The introduction of slowback rules keeps business going to some extent, so the increase in revenue due to the presence of slowback rules may not be enough to offset the resulting loss of revenue associated with lower government investment. I found that. Therefore, there may be short-term loss of revenue associated with the abolition, but these may disappear over time. The abolition of the fallback rule means a relatively small, short-term investment that has positive long-term economic consequences for the state.
Protect your company from tax increases in unemployment insurance. Wisconsin is taking a heavy toll on the Unemployment Trust Fund with historic unemployment in 2020. Unemployment insurance tax, which finances state unemployment benefits, is paid by the Wisconsin employer. The Wisconsin Department of Labor Development announced: Unemployment tax rate will remain stable In 2021, the state must use some of its excess revenue to prevent employers from being exposed to future UI tax increases. This is because future UI tax increases will add to the time it takes many businesses to get their employees back on track and return to profitability. Pandemic. Importantly, this is the easiest way to replenish the trust fund, and the state will be offered pre-pandemic funding without affecting state revenues, under the U.S. Bailout Planning Act. You can do this with the federal aid dollar.
Reduce your dependency on property tax. One of the economically damaging taxes Wisconsin continues to levy is taxes on certain tangible moveable items, such as office furniture and equipment. For many Wisconsin employers, property taxes are a major contributor to high tax burdens in the state. However, they have a greater impact on some industries than others. Wisconsin has progressed over time by exempting additional classes of property, plant and equipment from this tax, but the state has taken these taxes off its books, especially given their complexity and the high cost of compliance. You should continue to strive to remove it completely.
As Wisconsin is leaving the pandemic behind, state policymakers are making the state more attractive to individuals and businesses, promoting faster and more resilient economic recovery, and being structurally sound to get the state on track. There is a rare opportunity to reinvest excess income in some way. Promote investment and growth in the state in the coming years. Not only are policymakers taking this opportunity to relieve Wisconsinites, but they are also offering economic opportunities and tax cuts that put the state on growth that can persist well beyond the next fiscal cycle. This way, you will have to make a down payment for the future of the state.
Wisconsin’s budget surplus presents opportunities for future growth