WisBusiness: Combined reporting provision riles GOP, businesses

By WisBusiness Staff

Backers of the measure call it “tax fairness” and closing the “Las Vegas loophole.”

Opponents, mainly Republicans and the business community, call instituting “combined reporting” for multi-state corporations a jobs-killer.

Both sides agree it will result in higher revenue to the cash-strapped state budget — to the tune of millions of dollars a year. Wisconsin Manufacturers & Commerce says the switch to “combined corporate income tax reporting” would require businesses to pay taxes on profits earned by subsidiaries in other states with no connection to Wisconsin. The switch to combined corporate income tax reporting could increase business taxes by as much as $100 million, WMC adds.

“How does combined reporting create jobs?” GOP Assembly Minority Leader Jeff Fitzgerald asked. “Combined reporting will drive business out of the state of Wisconsin.”

Gov. Jim Doyle, talking with reporters after addressing the Wisconsin Manufacturer’s and Commerce Business Day in Madison, spoke about the combined reporting proposal included in the state stimulus bill unveiled Feb. 11.

The Democratic governor indicated it was part of a compromise to put together the package.

“I think you all know this has never been … part of my agenda, I’ve never proposed it,” Doyle said.

“But I do think we’re at a time where we … need revenue and I think there’s fairness to it,” Doyle said. “I do think as part of the bill I also got some things we never would have had. … [T]he early stage credits, the business incentives, the tax credits are really good things that I’ve been working to get done a long time. So I think for business there’s a mixed bag here but I think it’s exactly the kind of thing we’re all going to have to confront. There’s going to have to be some shared sacrifice and we’re all going to have to compromise a little and move forward.”

Senate Minority Leader Scott Fitzgerald, the brother of Jeff Fitzgerald, urged WMC members to fight the proposed stimulus package backed by statehouse Democrats.

“The hospital tax is something that we’ve never agreed with, but it’s going to happen. Combined reporting will chase business out of the state. They want to legislate to change the Menasha ruling, custom software will be taxed. Streamlined sales will result in additional taxes on legal services and products.” Fitzgerald warned. “These things change the direction that the state’s moving.”

The Legislature’s Joint Finance Committee, controlled by Democrats, is set to meet Tuesday to begin deliberations on the state stimulus, with a goal of getting through the Assembly and Senate and on to Doyle’s desk by Feb. 20.