A handful of Minnesota legislators are unwilling to give up on a defunct income tax reciprocity agreement between Minnesota and Wisconsin that allowed residents of one state who worked in the other to pay income taxes in only one state.
The agreement appeared in its death throes late last year, when negotiations between officials in the two states broke down over Minnesota’s request that Wisconsin make more timely payments to Minnesota (the Wisconsin-to-Minnesota payments were customarily being paid an average of 17 months after they were collected).
After negotiations broke off, Minnesota Gov. Tim Pawlenty scrapped the agreement. But state Sen. Kathy Saltzman, DFL-Woodbury, hasn’t given up on the possibility of reviving the agreement.
Last week, Saltzman introduced SF 3017, which would authorize a study by the Minnesota Department of Revenue to determine the number of residents in each state who earn income in the other state, the total amount of income earned by those who cross the border to get to their jobs, and the amount of revenue that would be lost by each state if the income tax reciprocity agreement were resumed.
Another Minnesota legislator who represents a district that borders Wisconsin, Sen. Sharon Erickson Ropes, DFL-Winona, has introduced SF 2599, which would reinstate the income tax reciprocity agreement and ensure that it remained in effect “until terminated by Minnesota or Wisconsin law.”
Erickson Ropes’ bill would allow the state revenue commissioner to modify the timing or the method of calculating payments under the agreement, but only the Legislature would be able to scrap the agreement.
Both Saltzman’s and Erickson Ropes’ bills were referred to the Senate Taxes Committee, which is scheduled to take up both pieces of legislation at a hearing Thursday.
Both Senate bills have companion legislation in the House: HF 3370, authored by Rep. Roger Reinert, DFL-Duluth, mirrors SF 3017, and HF 2682, authored by Rep. Greg Davids, R-Preston, is the companion to the Erickson Ropes legislation.
Both House bills were referred to the House Taxes Committee, which has not scheduled a hearing on either one.