State tax reciprocity to be examined

Gov. Pawlenty threatens 40-year mutual tax agreement.

by Ryan Brown

In response to Governor PawlentyâÄôs recent action to end the tax reciprocity between Minnesota and Wisconsin, State Senator Kathy Saltzman (DFL-Woodbury) urged further discussion of the matter, saying the action means a tax increase for 8,000 Minnesotans and threatens the historically productive working relationship between the two states. âÄúMany Minnesotans are feeling acute financial pressures due to the economic downturn,âÄù Saltzman said, âÄúâĦit does not make sense to decide at this time that one group of Minnesotans should pay more in taxes because of where they work.âÄù The Minnesota-Wisconsin tax reciprocity agreement, in place since 1968, is meant to ease the ability of Minnesotans and Wisconsinites to live in one state and work in the other. Under reciprocity, taxpayers in such circumstances need file only one income tax return. Ending the reciprocity agreement means 8,000 Minnesota residents who work in Wisconsin will need to file a separate Wisconsin income tax return, resulting in increased paperwork and an average additional tax payment to Wisconsin of $300. According to the Minnesota Department of Revenue, termination of the reciprocity agreement becomes effective for income earned on or after January 1, 2010. This affects roughly 13,000 Minnesotans and 33,500 Wisconsin residents. Saltzman is working with Wisconsin State Senator Sheila Harsdorf (R-River Falls) to organize a meeting of Minnesota and Wisconsin legislators who represent border communities, with the purpose of examining the issue and finding ways to maintain a positive cooperative relationship between the two states. The meeting is tentatively set for the morning of October 12 in Woodbury. Ryan Brown DFL Legislative Assistant