Wisconsin and Minnesota Battle of the Border Heats Up

Published On: 26th February 2013

From the internet

The border battle between Minnesota and Wisconsin is heating up.

Due to a proposal to extend sales tax to items that are currently not subject to it, Wisconsin’s governor and a state legislator are working to convince Minnesota companies to bring their business to Wisconsin.

When Minnesota’s Governor, Mark Dayton, proposed lowering the sales tax but extending it to clothing, services, and over-the-counter medications, Wisconsin’s governor jumped on the opportunity. However, Dayton has stated that this is “job poaching.”

It has been said that such an issue could result in agreements between tax reciprocity and college tuition being threatened. Wisconsin’s governor, Scott Walker, stated in a tweet that what “stirred the pot” was when Dayton proposed a sales tax on business-to-business transactions. It is believed that taxation on these transactions would bring in $2 billion.

The two states have had a long standing agreement to allow students in each state to receive in-state tuition rates at the University of Minnesota and the University of Wisconsin no matter where they live in the two states. This is an arrangement that tends to benefit Wisconsin a little more, especially with some schools depending on students that come from the Twin Cities.

The states have also had a deal for over 40 years that allows residents of one state to work in the other and file only one state on their income tax return. There are approximately 60,000 Wisconsin residents that work in Minnesota and 20,000 Minnesota residents that work in Wisconsin.

In 2009, former Minnesota Governor Tim Pawlenty said that tax reciprocity was costing the state millions. No resolution has been reached in this dispute.

As for why Wisconsin’s Governor is trying to pull businesses from Minnesota, he has also faced a budget deficit that he inherited from the previous administration. His challenge is to close a gap of $1 billion.

Dayton’s tax proposal is to tax professional services, which includes legal and accounting services, advertising, and construction. He says the revenues would be used for economic development, education, and property tax relief for the middle class.

When Wisconsin’s Governor received this information, he tweeted on Twitter that Wisconsin was open for business.

Dayton responded the next day that Walker doesn’t have an economic development record to brag about and elaborated on the conditions of Walker’s economy in Wisconsin.

Source: WSJ