The state Legislature passed a bill this session to eliminate the personal property tax affecting businesses and provided funding in the 2021-23 state budget to give municipalities money to make up for it. But with a stroke of his pen on Thursday, Gov. Tony Evers vetoed the bill that would have eliminated the archaic personal property tax.
The governor said he had concerns that it could provide tax breaks to manufacturers located outside the state who have warehouses here, though Republicans had amended the bill earlier in an effort to address that.
In that case, legislators should move fast to address Evers’ concerns and pass the bill again. The funds are there for municipalities and now is the time to do away with the tax for good.
For those not familiar, the personal property tax is a tax that businesses throughout the state have to pay on things such as equipment and furnishing. Over the years there have been so many exceptions that the number of things taxed has lessened and lessened, and it really ends up hitting Main Street businesses.
The tax was first implemented over 170 years ago as part of the state’s property tax, originally exempted $75 worth of household items and included property such as bonds, jewelry, furniture, cattle and crops.
All of Wisconsin’s neighbors — Minnesota, Iowa, Illinois and Michigan — have repealed their personal property tax laws.
This tax is on top of the property taxes that businesses must pay; it unfairly affects brick-and-mortar stores that have to pay it while their online-only competitors do not.
It makes sense to support the brick-and-mortar businesses. For that reason the governor should support the initiative to eliminate the tax.
“For many small businesses, complying with the recordkeeping costs associated with the tax can be more expensive than the tax itself,” Wisconsin Manufacturers & Commerce said in a news release praising the bill eliminating the tax.
Calling it “an archaic and burdensome tax,” WMC General Counsel and Director of Tax, Transportation & Legal Affairs Cory Fish said the tax has cost Wisconsin businesses millions in unnecessary audit and litigation costs and said it’s vital for legislators to support small businesses still recovering from “one of the biggest economic downtowns in a century.”
While the tax should be eliminated for good, the state must continue to support municipalities that will be losing revenue from the personal property tax. Madison’s City Assessor Michelle Drea said Madison had $13.4 million in revenue from the personal property tax in 2021.
Arbitrary taxes like the personal property tax on business furnishings and fixtures should be eliminated in favor of funding formulas that make more sense in 2021. A lot has changed since Wisconsin became a state in 1848. It’s time for this change to happen as well; the Legislature should act swiftly to do so.