Wisconsin, Minnesota end tax talks

Talk about it

ST. PAUL — A $40 million disagreement means people who live in Minnesota or Wisconsin and work in the other state will need to file income tax returns in both.

“A final nail in the issue,” is how Minnesota Revenue Commissioner Ward Einess described the situation.

The commissioner and Wisconsin legislators met in a Wednesday teleconference, which ended with Einess rejecting a Wisconsin offer that he said would have made the Minnesota budget deficit $40 million bigger.

Einess said he did not expect another Wisconsin offer “for the foreseeable future,” perhaps a couple of years.

Wisconsin legislative leaders have a special session next week and had planned to increase back payments to Minnesota by $90 million.

“The long-standing agreement should not have been scuttled for short-term proprietary gain as it was,” Wisconsin Sen. Sheila Harsdorf, R-River Falls, said in a press release. “While I’m greatly disappointed in both governors for failing to reach agreement months ago, I am heartened for the future of reciprocity because our state’s legislative leaders took unprecedented action to try and make this work.”

For more than 40 years, the reciprocity agreement allowed residents who live in one state and work in the other to file a single tax return in their home state. Because there are more than twice as many Wisconsin residents who work in Minnesota, Wisconsin then reimburses Minnesota for the tax it collects, but the process takes more than a year. Einess said Wisconsin is $130 million in arrears and Minnesota wants its money quicker in light of its budget deficit.

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