LRB-1673/2
JK:jld:jd
2015 - 2016 LEGISLATURE
April 22, 2015 - Introduced by Representatives Kremer, Horlacher, Knodl, Kulp,
Quinn and T. Larson. Referred to Committee on Ways and Means.
AB178,1,4 1An Act to amend 71.05 (6) (a) 15., 71.08 (1) (intro.) and 71.21 (4) (a); and to
2create
71.07 (10), 71.10 (4) (gya), 71.26 (1) (i), 73.03 (72), 73.03 (72m) and
3238.24 of the statutes; relating to: tax credits and exemptions for businesses
4that sell noncompeting products in this state.
Analysis by the Legislative Reference Bureau
This bill provides an income and franchise tax exemption to a corporation that
establishes its headquarters in this state if the Wisconsin Economic Development
Corporation Board determines that the corporation would not sell products that
directly compete with products sold by any other business that has its headquarters
in this state. The bill also provides an individual income tax credit equal to 7.65
percent of the individual's income derived from sales of products by a partnership,
limited liability company, or tax-option corporation that establishes its
headquarters in this state if the products sold by the entity do not directly compete
with products sold by any other business that has its headquarters in this state.
Taxpayers may claim the exemption or credit for 20 taxable years. During that time,
the Department of Revenue (DOR) will annually determine the amount of any
additional income tax revenue collected from individuals employed by the business
and use that revenue to decrease individual income tax rates. With regard to a
business that claims the exemption, after the business stops claiming the exemption,
DOR will determine the amount of any additional corporate tax revenue collected
from the business and use that revenue to decrease corporate tax rates.

Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
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:
AB178,1 1Section 1. 71.05 (6) (a) 15. of the statutes is amended to read:
AB178,2,82 71.05 (6) (a) 15. Except as provided under s. 71.07 (3p) (c) 5., the amount of the
3credits computed under s. 71.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2dr), (2ds),
4(2dx), (2dy), (3g), (3h), (3n), (3p), (3q), (3r), (3rm), (3rn), (3s), (3t), (3w), (4k), (4n), (5e),
5(5f), (5h), (5i), (5j), (5k), (5r), (5rm), (6n), and (8r), and (10) and not passed through
6by a partnership, limited liability company, or tax-option corporation that has added
7that amount to the partnership's, company's, or tax-option corporation's income
8under s. 71.21 (4) or 71.34 (1k) (g).
AB178,2 9Section 2. 71.07 (10) of the statutes is created to read:
AB178,2,1010 71.07 (10) Noncompeting product credit. (a) Definitions. In this subsection:
AB178,2,1311 1. "Claimant" means a partner of a partnership, member of a limited liability
12company, or shareholder of a tax-option corporation who files a claim under this
13subsection.
AB178,2,1514 2. "Noncompeting product" means a product sold by a partnership, limited
15liability company, or tax-option corporation, as determined under s. 238.24 (2).
AB178,2,1916 (b) Filing claims. Subject to the limitations provided in this subsection, a
17claimant may claim as a credit against the tax imposed under s. 71.02 or 71.08, up
18to the amount of the tax, 7.65 percent of the claimant's income derived from sales of
19the claimant's noncompeting product.
AB178,3,3
1(c) Limitations. 1. A claimant may claim the credit under this subsection for
2no more than 20 taxable years beginning with the first taxable year for which the
3claimant is certified under s. 238.24 (2) to claim the credit.
AB178,3,54 2. A claimant shall submit with his or her tax return a copy of the claimant's
5certification under s. 238.24 (2).
AB178,3,76 (d) Administration. Section 71.28 (4) (g) and (h), as it applies to the credit under
7s. 71.28 (4), applies to the credit under this subsection.
AB178,3 8Section 3. 71.08 (1) (intro.) of the statutes is amended to read:
AB178,3,199 71.08 (1) Imposition. (intro.) If the tax imposed on a natural person, married
10couple filing jointly, trust, or estate under s. 71.02, not considering the credits under
11ss. 71.07 (1), (2dd), (2de), (2di), (2dj), (2dL), (2dr), (2ds), (2dx), (2dy), (3m), (3n), (3p),
12(3q), (3r), (3rm), (3rn), (3s), (3t), (3w), (4k), (5b), (5d), (5e), (5f), (5h), (5i), (5j), (5n), (6),
13(6e), (8r), (9e), (9m), and (9r), and (10), 71.28 (1dd), (1de), (1di), (1dj), (1dL), (1ds),
14(1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.47 (1dd), (1de), (1di), (1dj), (1dL), (1ds),
15(1dx), (1dy), (2m), (3), (3n), (3t), and (3w), 71.57 to 71.61, and 71.613 and subch. VIII
16and payments to other states under s. 71.07 (7), is less than the tax under this
17section, there is imposed on that natural person, married couple filing jointly, trust
18or estate, instead of the tax under s. 71.02, an alternative minimum tax computed
19as follows:
AB178,4 20Section 4. 71.10 (4) (gya) of the statutes is created to read:
AB178,3,2121 71.10 (4) (gya) Noncompeting product credit under s. 71.07 (10).
AB178,5 22Section 5. 71.21 (4) (a) of the statutes is amended to read:
AB178,4,223 71.21 (4) (a) The amount of the credits computed by a partnership under s.
2471.07 (2dd), (2de), (2di), (2dj), (2dL), (2dm), (2ds), (2dx), (2dy), (3g), (3h), (3n), (3p),
25(3q), (3r), (3rm), (3rn), (3s), (3t), (3w), (4k), (4n), (5e), (5f), (5g), (5h), (5i), (5j), (5k), (5r),

1(5rm), (6n), and (8r), and (10) and passed through to partners shall be added to the
2partnership's income.
AB178,6 3Section 6. 71.26 (1) (i) of the statutes is created to read:
AB178,4,84 71.26 (1) (i) Income from noncompeting products. Income derived from the sale
5of products by a corporation certified under s. 238.24 (1). A corporation certified
6under s. 238.24 (1) may claim the exemption under this paragraph for no more than
720 taxable years beginning in the year in which the corporation establishes its
8commercial domicile in this state.
AB178,7 9Section 7. 73.03 (72) of the statutes is created to read:
AB178,4,1210 73.03 (72) (a) Annually, to determine the amount of additional revenue that the
11department collected from the taxes imposed under s. 71.02 from individuals who are
12employed by the entities described under s. 238.24.
AB178,4,1913 (b) After the department makes the determination under par. (a), the
14department shall determine how much the individual income tax rates under s.
1571.06 may be reduced in the following taxable year in order to decrease individual
16income tax revenue by the amount determined under par. (a). For purposes of this
17paragraph, the department shall calculate the tax rate reductions in proportion to
18the share of gross tax attributable to each of the tax brackets under s. 71.06 in effect
19during the most recently completed taxable year.
AB178,4,2420 (c) The department shall certify the determinations made under pars. (a) and
21(b) to the secretary of the department of administration, to the governor, and to the
22legislature and specify with that certification that the new tax rates take effect in the
23taxable year following the taxable year in which the department makes the
24certification under this paragraph.
AB178,8 25Section 8. 73.03 (72m) of the statutes is created to read:
AB178,5,4
173.03 (72m) (a) Annually, to determine the amount of additional revenue that
2the department collected from the taxes imposed under s. 71.23 (1) and (2) from
3corporations certified under s. 238.24 (1) that no longer claim the exemption under
4s. 71.26 (1) (i).
AB178,5,85 (b) After the department makes the determination under par. (a), the
6department shall determine how much the tax rates under s. 71.27 may be reduced
7in the following taxable year in order to decrease corporate income and franchise tax
8revenue by the amount determined under par. (a).
AB178,5,139 (c) The department shall certify the determinations made under pars. (a) and
10(b) to the secretary of the department of administration, to the governor, and to the
11legislature and specify with that certification that the new tax rates take effect in the
12taxable year following the taxable year in which the department makes the
13certification under this paragraph.
AB178,9 14Section 9. 238.24 of the statutes is created to read:
AB178,5,21 15238.24 Noncompeting products. (1) A corporation that relocates from
16another state or country to this state and establishes its commercial domicile, as
17defined in s. 71.22 (1g), in this state may claim the exemption under s. 71.26 (1) (i)
18if the board determines that the products sold by the corporation would not directly
19compete with the products sold of any other entity that has its commercial domicile
20in this state. The board may certify a corporation to claim the exemption under s.
2171.26 (1) (i) in the manner determined by the board.
AB178,6,5 22(2) If a partnership, limited liability company, or tax-option corporation
23relocates from another state or country to this state and establishes its commercial
24domicile, as defined in s. 71.01 (1b), in this state, the partners, members, or
25shareholders may claim the credit under s. 71.07 (10) if the board determines that

1the products sold by the partnership, limited liability company, or tax-option
2corporation would not directly compete with the products sold by any other entity
3that has its commercial domicile in this state. The board may certify partners,
4members, and shareholders to claim the credit under s. 71.07 (10) in the manner
5determined by the board.
AB178,6,7 6(3) (a) The board shall seek input from the entities doing business in this state
7in order to make the determinations under subs. (1) and (2).
AB178,6,118 (b) The board shall revoke a certification under sub. (1) or (2) if the board
9subsequently determines that a product sold by an entity described under sub. (1)
10or (2) directly competes with another product sold in this state by an entity that has
11its commercial domicile in this state.
AB178,10 12Section 10. Initial applicability.
AB178,6,1313 (1) This act first applies to taxable years beginning on July 1, 2015.
AB178,6,1414 (End)
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