Gov. Tony Evers announced Tuesday that new taxes paid by out-of-state retailers and online businesses in Wisconsin yielded an estimated $256.4 million in tax relief for Wisconsinites in the fiscal year ending Sept. 30. The amount is more than three times the $77.4 million in tax relief in 2019.
The tax savings, targeted at low and middle-income families under a law Evers signed last year, 2019 Wisconsin Act 10 (not to be confused with the union-busting Act 10 signed by former Gov. Scott Walker) translates into a tax cut of approximately $137 for the average household with an income of $59,523, according to the governor’s office. The same household would have received a tax cut of only $70 under a 2017 across-the-board tax cut, according to the governor’s office. “By contrast,” a press release from the governor’s office stated, “a household with an income of a million dollars will receive a tax cut of approximately $145, while the across-the-board rate cut passed in 2017 … would have yielded them approximately $1,841.”
Up until the 2018 South Dakota v. Wayfair decision by the U.S. Supreme Court, the Wisconsin Department of Revenue (DOR) only collected sales tax from entities that were physically located in the state. The Supreme Court decision overturned a 1992 court ruling which barred states from compelling out-of-state retailers to charge sales or use tax for mail or internet orders. 2019 Wisconsin Act 10 requires all retailers selling in Wisconsin to collect sales or use tax at the point of sale.
The bill was authored by Rep. Jessie Rodriguez (R-South Milwaukee), Rep. Terry Katsma (R-Ootsburg), John Macco (R-Green Bay) and Robert Wittke (R-Racine) and passed the Senate 33-0 on a voice vote on July 3, 2019, according to the Wheeler Report.
In addition to creating a more level playing field between online and brick-and-mortar retailers, the legislation specifically targets the additional tax collections at Wisconsinites in the lowest two tax brackets.
“I was proud to sign legislation that received bipartisan support to ensure that the rate cuts would reduce taxes for all income groups but especially for our lower and middle-income taxpayers,” Evers said in a statement Tuesday. “It is important we are able to provide this much-needed tax relief for Wisconsinites, especially during these unprecedented times.”
“We are pleased the department could collect these funds from more than 9,000 remote sellers, which is up from 5,000 remote sellers previously,” DOR Secretary Peter Barca added. “I am pleased to see that the changes we made in the Marketplace legislation are delivering the most relief to those who most need it.”