MADISON —Every January, Wisconsin job creators are reminded that Wisconsin’s tax burden remains far too high when they are required to catalog — and are taxed on — the value of all the “personal property” of their businesses, from phones to forklifts. That reminder was even more apparent this year following months of shutdowns and an economic downturn that have pushed many businesses to the financial brink. Small businesses are hurting. The repeal of this archaic tax will help them dig out of these public health and economic crises by allowing them to reinvest in their employees and equipment and eliminate unnecessary paperwork.
The Wisconsin Legislature has made significant progress in reducing the tax burden for Wisconsin businesses and making Wisconsin a more competitive state to do business. However, one of Wisconsin’s oldest — and most convoluted — taxes (predating statehood) is still on the books. The personal property tax is hard for businesses to comply with, expensive for government to administer, and collects only modest revenue. Businesses are already on the hook for other taxes including real estate property taxes, corporate taxes, and income taxes. They do not need the personal property tax as an additional concern.
To be clear, these various taxes are incredibly burdensome and Wisconsin is struggling to keep up with other states to create a pro-economic growth environment. Wisconsin is ranked as having the 6th worst property tax burden (personal property tax included), the 11th worst individual income tax burden, and the 20th worst corporate income tax burden in the nation. All of our neighboring states—Iowa, Illinois, Minnesota, and Michigan—no longer have a personal property tax. Further, states like Iowa and Indiana have recently undergone significant pro-business tax reform. If Wisconsin’s personal property tax remains in place, businesses will choose to invest in new equipment — and the associated jobs — in other states where they are not challenged by onerous administrative requirements and excessive taxes.
The strain placed on Main Street businesses by the personal property tax is completely disproportionate to the total revenue for the state raised. The personal property tax raises modest revenue and it is not uncommon for the cost to small businesses to keep up with the onerous record-keeping and reporting requirements to exceed the taxes they actually owed. Further, because of the multitude of exemptions, the tax is constantly under attack leading to time-consuming and expensive audits and excessive litigation, which cost job creators and taxpayers significant amounts of money.
Wisconsin can repeal the personal property tax while making sure that local governments have the tools they need to maintain their fiscal health. In 2017, the legislature and then-Gov. Scott Walker exempted certain machinery from the personal property tax and still provided local governments with the resources they needed. If the legislature decides to repeal the personal property tax in its entirety, they could take similar action.
The past year has highlighted just how important it is to get government out of the way and let businesses create family-supporting jobs and spur economic growth. Repealing Wisconsin’s personal property tax would help Wisconsin businesses get back on their feet following a year of financial hardship. Providing businesses with relief from the personal property tax will pay for itself in the future by fostering further growth, investment, and job creation in Wisconsin.
Corydon Fish is General Counsel and Director of Tax, Transportation, and Legal Affairs at Wisconsin Manufacturers & Commerce. Brian Dake is President and Legislative Director at Wisconsin Independent Businesses.