Lawmakers from Wisconsin and Minnesota discuss ways to continue the income tax reciprocity agreement between the neighboring states.
Minnesota recently cut-off the long-standing agreement – which will force people who live in one state and work in another to file income tax returns in both states.
“There are about 80,000 people that take advantage of … what we call the ‘border crossers’ … that live in one state and work in the other. So they are really the ones that would suffer from this.”
State Representative Ann Hraychuck (D-Balsam Lake) attended the two-and-a-half hour meeting Monday near the Twin Cities. The Balsam Lake Democrat met with legislators of both states, members of Wisconsin’s Department of Commerce, Legislative Fiscal Bureau, and the Minnesota governor’s office.
As part of the 40-year reciprocity deal, the Badger State reimburses the Gopher State every year for income taxes collected, because more than twice as many Wisconsinites work in Minnesota than vice versa. Hraychuck says participants talked about the payment schedule.
“Because in Wisconsin we are holding on to virtually Minnesota money for longer than we need to. It’s part of an agreement, I mean, we’re following and agreement that has been in place. We’re not late with payments but we need to change that so that Minnesota gets their money quicker.”
Hraychuck says those attending the meeting also talked about updating the benchmark study for rates and general logistics of the program, which was originally done in 1995. And, she says, it’s important to negotiate a better interest rate.
Hraychuck says the next step is to write a letter to both states’ governors outlining the discussion, and highly encourage the leaders to go back to the table and work out a compromise deal. They also hope to set up a policy to prevent this from happening again in the future.