Business leaders from across Wisconsin praised the bipartisan legislation signed by Gov. Tony Evers Tuesday that ended the Wisconsin Personal Property Tax.
The personal property tax was created in the 1830s to fund the territorial government at a time when there wasn’t income or sales taxes. Exemptions have been carved out over the 180-year history of the tax leading critics to call it unfair and burdensome to businesses large and small.
According to the Wisconsin Policy Forum, personal property has accounted for between 2.2% and 2.6% of the state’s property tax base since 2005. The personal property tax originally covered items like livestock, furniture, jewelry and vehicles. It is not the “real property tax” which covers land and buildings and remains in place.
The tax has been subject to lawsuits and reforms throughout its history reducing what is taxed and how much is collected. The most recent change was an exemption for machinery, tools and patterns not used for manufacturing that was part of the 2017-2019 state budget approved by Gov. Scott Walker.
“For businesses small and large, the state’s personal property tax has been an undue burden,” shared WMC’s Director of Tax, Transportation & Legal Affairs Evan Umpir. “Oftentimes, navigating the red tape and recordkeeping for this tax could be more expensive than the tax itself. For business owners, that time and money could be spent investing in higher wages for employees, capital improvements or back into their local communities.”
Local government officials have occasionally objected to changes or proposals to eliminate the tax over concerns about how it would impact revenue. Evers recently signed a shared revenue bill into law that taps into the state’s 5% sales tax to help maintain revenue for local and county government. The law increases shared revenue by nearly 20% for most municipalities after about a decade of stagnant growth and linking it to the sales tax provides a mechanism for continued growth.
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