Minnesota officials seek tax break for Wisconsin workers

Measure would cost MN $8.6 million in first year.

ST. PAUL, Minn. (AP) — A Minnesota lawmaker has proposed a bill to help residents who may pay higher taxes due to working in Wisconsin.

The bill, proposed by Republican Sen. Greg Davids would offset the higher taxes in Wisconsin and give Minnesota residents a tax credit, the Post Bulletin reported. The measure, which is being considered in a larger tax bill, would cost the state $8.6 million in the first year and would drop to $6 million a year later.

For more than 40 years, Minnesota had a tax reciprocity agreement with Wisconsin, before it ended in 2009. Around 24,000 Minnesota residents work in Wisconsin, and many of them are faced with paying hundreds of dollars more in income taxes than they did when reciprocity was in place.

“Minnesotans really get hammered at no fault of their own,” said Davids, chairman of the House Taxes Committee.

La Crescent Mayor Mike Poellinger said approximately 80 percent of the town’s employed residents work in Wisconsin. The loss of tax reciprocity has been a big headache for these residents, who now have to file tax returns in both Minnesota and Wisconsin.

“Hopefully, the Legislature can come together and they won’t be polarized on this because it benefits both Republicans and Democrats if the people can stay in the state of Minnesota and seek employment elsewhere,” Poellinger said. “There really isn’t a big hub in our area for employment other than La Crosse.”

Minnesota Department of Revenue tax policy manager Paul Cummings told the committee that the tax credit would be complicated. He said it’s unclear whether eligible residents would file their taxes electronically or in paper form, and that residents would still have to file taxes in both states.

Cummings called Davids’ bill a “creative solution” and said department officials are willing to work with him on it.