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Tax reciprocity? Don't hold your breath, official says

Wisconsin Revenue Secretary Richard Chandler speaks at a tax forum Tuesday, Feb. 27, at the UW-River Falls Hudson Center. Mike Longaecker / RiverTown Multimedia

HUDSON — Wisconsin's top tax official cautioned residents here not to expect imminent change to a longstanding impasse with Minnesota.

The two states have been at loggerheads over tax reciprocity for years and Wisconsin Revenue Secretary Richard Chandler said Wisconsin has done virtually everything it can do to restore the agreement that ended in January 2010.

"We just see things differently," he said Feb. 27 during a public meeting organized by Rep. Shannon Zimmerman at the UW-River Falls Hudson Center.

The agreement allowed residents working across state lines to file a single income tax return in their home state. The states would exchange payments when one received less than the other — namely, Wisconsin to Minnesota; more Badger State residents work in Minnesota than do Gopher State residents working here.

Wisconsin fell behind on the payments, which led to the agreement dissolving.

Chandler said "we have tried everything we can think of" to restore the pact, but Minnesota hasn't agreed. Minnesota sought provisions including more frequent payments and benchmarks, all of which Wisconsin agreed to in a letter.

"And they still said no," Chandler said, conceding that the Wisconsin proposal requires Minnesota to do "a bit more work."

The issue affects about 60,000 Wisconsinites and 20,000 Minnesotans who work across the border, Chandler said.

He urged the 15-or-so attendees at the meeting to find inroads with Minnesotans who know lawmakers there. Chandler said he hopes those lawmakers might put pressure on the next Minnesota governor — Mark Dayton won't be seeking re-election this fall — to restore the agreement.

Zimmerman said that while a legislative fix represented a salve for Minnesotans working in Wisconsin, the issue remains problematic for residents here.

"We will not relent," the River Falls Republican told the audience. "We will not stop trying."

Chandler, appointed to the post by Gov. Scott Walker in 2011, served previously in the same role under another Republican governor — Scott McCallum, who was in office from 2001 to 2003.

In addition to the reciprocity discussion, the revenue secretary outlined the state of Wisconsin's tax system before fielding questions from the audience.

Zimmerman also weighed in during the meeting, including a response to Pierce County Board Supervisor and Senate District 31 GOP candidate Mel Pittman, who urged the state to consider the impact things like sales taxes have on senior citizens.

Zimmerman, who serves on the Assembly's Ways And Means Subcommittee on Excise Taxes and Fees, discussed how his panel is tasked with revamping Wisconsin's tax system. He raised the example of Wisconsin's excise tax on alcohol. Zimmerman said the tax hasn't been changed in decades and remains "very, very low" in the face of "monstrous consumption."

"It's interesting," Zimmerman said, while making clear he wasn't currently advocating for a change.

Mike Longaecker

Mike Longaecker is the regional public safety reporter for RiverTown Multimedia. His coverage area spans St. Croix and Pierce counties. Longaecker served from 2011-2015 as editor of the Woodbury Bulletin. A University of Wisconsin-River Falls graduate, Longaecker previously reported for the Red Wing Republican Eagle and for the Forum Communications Minnesota Capitol Bureau. You can follow him on Twitter at @Longaecker

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