AB1117: Bill Text

LRB-4502/1

MES:wlj:pg

2005 - 2006 LEGISLATURE

2005 Assembly BILL 1117

March 14, 2006 - Introduced by Representatives Grigsby, Berceau, Fields, Kessler, Kreuser, Lehman, Nelson, Parisi, Pocan, Richards, Seidel, Sheridan, Sinicki, Toles, Travis, Turner, A. Williams, Young and Zepnick, cosponsored by Senators Decker, Breske, Miller, Coggs and Robson. Referred to Committee on Ways and Means.

AB1117,1,3 An Act to amend 71.08 (1) (intro.) and 71.10 (4) (i); and to create 20.835 (2) (en) and 71.07 (8r) of the statutes; relating to: creating a refundable individual income tax living wage credit.

Analysis by the Legislative Reference Bureau

This bill creates a refundable individual income tax credit based on the difference between the federal poverty line and the sum of income received by the claimant, his or her spouse who resides with the claimant, and his or her dependents. The credit may be claimed only by an individual who was eligible for, and claimed in the previous year, the earned income tax credit.

To claim the credit, the bill requires that the claimant be domiciled in this state during the entire calendar year to which the claim relates, and requires that the claimant works in paid employment for at least 1,750 hours in the taxable year to which the claim relates. If the amount of the credit exceeds the taxpayer's income tax liability, the difference will be refunded to the taxpayer by check.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB1117, s. 1 Section 1. 20.835 (2) (en) of the statutes is created to read:

AB1117,2,2 20.835 (2) (en) Living wage tax credit. A sum sufficient to pay the claims approved under s. 71.07 (8r).

AB1117, s. 2 Section 2. 71.07 (8r) of the statutes is created to read:

AB1117,2,5 71.07 (8r) Living wage tax credit. (a) Definitions. Except as provided in par. (c) 7. and 8., in this subsection:

AB1117,2,11 1. "Claimant" means an individual who files a claim under this subsection and who was domiciled in this state during the entire calendar year to which the claim relates. When 2 individuals of a household are able to meet the qualifications for a claimant, they may determine between them as to who the claimant is. If they are unable to agree, the matter shall be referred to the secretary of revenue and the secretary's decision is final.

AB1117,2,12 2. "Homestead" has the meaning given in s. 71.52 (3).

AB1117,2,17 3. "Household" means a claimant and an individual related to the claimant as husband or wife residing in the same homestead as the claimant and includes all of the claimant's dependents, as defined in section 152 of the Internal Revenue Code, who have the same principal abode as the claimant for more than 6 months during the year to which the claim relates.

AB1117,2,23 4. "Income" means income, as defined in s. 71.52 (6), received by the claimant, and by all persons of a household while members of the household, in the year before the year to which the claim relates, plus all of the following amounts received by such individuals in the year before the year to which the claim relates, minus the net income tax imposed under s. 71.02 that is paid by the claimant in the year before the year to which the claim relates:

AB1117,2,25 a. The amount of earned income tax credit under section 32 (b) (1) (A) to (C) of the Internal Revenue Code.

AB1117,3,1 b. The amount of any refundable income tax credit under this section.

AB1117,3,2 c. The amount of any income tax refund paid by this state.

AB1117,3,4 d. The refundable portion of the federal child tax credit under section 24 (d) of the Internal Revenue Code.

AB1117,3,6 5. "Poverty line" means the nonfarm federal poverty line for the continental United States, as defined by the federal department of labor under 42 USC 9902 (2).

AB1117,3,15 (b) Filing claims. Subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02 an amount, if positive, that is calculated by subtracting the sum of the claimant's income and all income from all members of the claimant's household from the poverty line. If the allowable amount of the claim exceeds the income taxes otherwise due on the claimant's income, the amount of the claim not used as an offset against those taxes shall be certified by the department of revenue to the department of administration for payment to the claimant by check, share draft, or other draft from the appropriation under s. 20.835 (2) (en).

AB1117,3,18 (c) Limitations. 1. No claimant may claim the credit under this subsection unless the claimant was eligible for, and claimed, the credit under sub. (9e) in the year before the year to which the claim relates.

AB1117,3,20 2. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

AB1117,3,22 3. No individual may claim the credit under this subsection unless his or her income is at least zero dollars in the year to which the claim relates.

AB1117,3,24 4. Only one claimant per household per year may claim the credit under this subsection.

AB1117,4,3 5. No individual may claim the credit under this subsection unless he or she works in paid employment for at least 1,750 hours in the taxable year to which the claim relates.

AB1117,4,6 6. In calculating the credit for which a claimant may be eligible under this subsection, the size of the family unit under the U.S bureau of the census' poverty thresholds shall be the same as the size of the claimant's household.

AB1117,4,10 7. For taxable years beginning after December 31, 2006, and before January 1, 2008, "poverty line" means 90 percent of the nonfarm federal poverty line for the continental United States, as defined by the federal department of labor under 42 USC 9902 (2).

AB1117,4,14 8. For taxable years beginning after December 31, 2007, and before January 1, 2009, "poverty line" means 95 percent of the nonfarm federal poverty line for the continental United States, as defined by the federal department of labor under 42 USC 9902 (2).

AB1117,4,16 (d) Administration. 1. Subsection (9e) (d), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

AB1117,4,20 2. The department of workforce development and the department of health and family services shall provide any information in their possession that the department of revenue requests that would enable the department of revenue to administer the credit under this subsection.

AB1117, s. 3 Section 3. 71.08 (1) (intro.) of the statutes, as affected by 2005 Wisconsin Act 25, is amended to read:

AB1117,5,6 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married couple filing jointly, trust, or estate under s. 71.02, not considering the credits under ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2fd), (3m), (3n), (3s), (3t), (5b), (5d), (6), (6e), (8r), and (9e), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), (3n), and (3t) and 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds), (1dx), (1fd), (2m), (3), (3n), and (3t) and subchs. VIII and IX and payments to other states under s. 71.07 (7), is less than the tax under this section, there is imposed on that natural person, married couple filing jointly, trust, or estate, instead of the tax under s. 71.02, an alternative minimum tax computed as follows:

AB1117, s. 4 Section 4. 71.10 (4) (i) of the statutes, as affected by 2005 Wisconsin Act 25, is amended to read:

AB1117,5,14 71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland preservation credit under subch. IX, homestead credit under subch. VIII, farmland tax relief credit under s. 71.07 (3m), farmers' drought property tax credit under s. 71.07 (2fd), veterans and surviving spouses property tax credit under s. 71.07 (6e), earned income tax credit under s. 71.07 (9e), estimated tax payments under s. 71.09, living wage tax credit under s. 71.07 (8r), and taxes withheld under subch. X.

AB1117, s. 5 Section 5. Initial applicability.

AB1117,5,16 (1) This act first applies to taxable years beginning on January 1, 2007.

AB1117,5,17 (End)