Delinquent Tax Measures 0.00 5.10 5.10 5.10 5.10
Corporate Income Tax
Single Sales Apportionment -74.60 -12.50 0.00 0.00 0.00
Combined Reporting 70.10 0.00 0.00 0.00 0.00
LLCs and Partnerships 0.00 12.50 12.50 0.00 0.00
Nexus Investigations 0.31 0.31 0.31 0.31 0.31
Internal Revenue Code Update 0.00 15.08 15.08 15.08 15.08
Delinquent Tax Measures 0.00 0.63 0.63 0.63 0.63
Activity Not Creating Nexus 0.00 0.00 -0.75 -0.75 -0.75
General Sales and Use Tax
Integrated Tax System 4.78 4.78 4.78 4.78 4.78
Timeshare Property 2.64 0.00 -0.16 -0.16 -0.16
Late Filing Fee 2.53 1.27 1.27 1.27 1.27
Nexus Investigations 1.00 1.00 1.00 1.00 1.00
Temporary Events 1.04 1.04 1.04 1.04 1.04
Direct Marketers Agreements 0.00 8.30 8.30 8.30 8.30
Occasional Vehicle Sales 0.00 0.41 0.41 0.41 0.41
Delinquent Tax Measures 0.00 3.22 3.22 3.22 3.22
Farm Electricity 0.00 0.00 -2.90 -2.90 -2.90
Railroad Tracks 0.00 0.00 -0.47 0.00 0.00
Joint
Governor Finance Legislature Act 9 Act 10
Public Utility
Car Line Companies -$0.30 $0.00 $0.00 $0.00 $0.00
Extend Current Computer Exemption -0.15 -0.08 -0.08 -0.08 -0.08
Expand Computer Exemption -0.08 0.00 0.00 0.00 0.00
Transition Fee Credit 0.00 -0.87 -0.87 -0.87 -0.87
Postpone Current Computer Exemption 0.00 0.00 0.00 0.00 0.00
Excise Taxes
Convert Tobacco Products Tax to Excise 0.00 0.88 0.88 0.88 0.88
Cigarette Tax Discount 0.00 0.00 -0.95 0.00 0.00
Total -$281.73 -$270.14 -$419.13 -$674.81 -$34.01
Individual and Corporate Income Taxes
1. INDIVIDUAL INCOME TAX MODIFICATIONS [LFB Papers 100 thru 109]
Governor: Modify the individual income tax structure by federalizing the treatment of social security benefits, increasing the sliding scale standard deduction, creating personal exemptions, creating a fourth income tax bracket, reducing the income tax rates, eliminating miscellaneous deductions from the itemized deduction credit, increasing the married couple credit, eliminating certain income tax credits and making withholding table adjustments. The administration estimates that these modifications would reduce individual income tax revenue by $289.0 million in 2000-01. On a tax year basis, the Governor's proposal would reduce income tax revenues by $168 million in 2000 and $269 million in 2001. The $289 million estimate for 2000-01 also includes $121 million from the proposed withholding table adjustment on July 1, 2000, as described later in this summary.
The administration did not provide a fiscal estimate of each income tax modification on an individual basis because of the interaction of the different provisions. For example, the estimated cost of eliminating the working families credit would be greatly offset due to the proposed increase in the standard deduction, the creation of the personal exemptions and the lower income tax rates.
A. Social Security Benefits. Federalize the treatment of social security benefits beginning with tax year 2000. Under federal law, no social security benefits are taxable for taxpayers with provisional income below $25,000 if single and $32,000 if married filing a joint return. Provisional income is defined as one-half of social security plus federal adjusted gross income (AGI), tax-exempt interest and other specified amounts that are excluded from gross income. Up to 50% of social security benefits are taxable if provisional income exceeds these base amounts and is below $34,000 if single and $44,000 if married-joint. For taxpayers with provisional income above the higher thresholds, up to 85% of benefits are taxable. Married taxpayers who file separate returns pay taxes on up to 85% of social security benefits.
Under current state law, up to 50% of social security benefits are taxable for taxpayers with provisional income above $25,000 if single, $32,000 if married-joint and zero if married-separate. No benefits are taxed for taxpayers with income below these amounts.
Under the Governor's recommendation, up to 85% of social security would be taxed by the state for taxpayers with income above $34,000 if single and $44,000 if married-joint and for all married-separate taxpayers. Taxpayers with income below these amounts would not be impacted by the modification.
B. Sliding Scale Standard Deduction. Increase the sliding scale standard deduction beginning with tax year 2000 by increasing the maximum standard deduction and the AGI amounts over which the credit is phased out. The estimated current law standard deduction formulas for tax year 2000 and the formulas under the Governor's proposal for 2000 are shown below. The estimated formulas under current law reflect two years of indexing over the 1998 amounts. The standard deduction would continue to be indexed for changes in inflation for tax years 2001 and thereafter under both current law and under the Governor's proposal.
Estimated Current Law Standard Deduction
Tax Year 2000
Filing Status Wisconsin AGI Standard Deduction
Single Less than $7,790 $5,400
$7,790 to $52,790 $5,400 – 12%(WAGI-$7,790)
Greater than $52,790 $0
Married, Less than $10,380 $9,240
Joint $10,380 to $57,099 $9,240 – 19.778%(WAGI-$10,380)
Greater than $57,099 $0
Married, Less than $4,940 $4,390
Separate $4,940 to $27,136 $4,390 – 19.778%(WAGI-$4,940)
Greater than $27,136 $0
Head-of- Less than $7,790 $7,310
Household $7,790 to $25,955 $7,310 – 22.515%(WAGI-$7,790)
Greater than $25,955 Single Standard Deduction
Governor’s Proposed Standard Deduction
Tax Year 2000
Filing Status Wisconsin AGI Standard Deduction
Single Less than $10,380 $7,200
$10,380 to $70,380 $7,200 – 12%(WAGI-$10,380)
Greater than $70,380 $0
Married, Less than $14,570 $12,970
Joint $14,570 to $80,150 $12,970– 19.778%(WAGI-$14,570)
Greater than $80,150 $0
Married, Less than $6,920 $6,160
Separate $6,920 to $38,070 $6,160 – 19.778%(WAGI-$6,920)
Greater than $38,070 $0
Head-of- Less than $10,380 $9,300
Household $10,380 to $30,350 $9,300 – 22.515%(WAGI-$10,380)
Greater than $30,350 Single Standard Deduction
C. Personal Exemptions. Provide personal exemptions to be subtracted from Wisconsin AGI in calculating Wisconsin taxable income, which is the amount of income subject to tax, beginning with tax year 2000. Under the Governor’s proposal for the 2000 tax year, a $600 personal exemption would be provided for each taxpayer, the taxpayer’s spouse and for each individual claimed as an exemption under the Internal Revenue Code (IRC). The personal exemption amount would be increased to $700 for tax year 2001 and thereafter.
Provide an additional $200 exemption in tax year 2000 for each taxpayer who has reached age 65 before the end of the tax year (two exemptions would be provided if both the taxpayer and their spouse are 65 at the end of the year). The additional exemption would be increased to $250 for tax years 2001 and thereafter. Thus, for each taxpayer over the age of 65 the total exemption would be $800 in 2000 and $950 in 2001 and thereafter.
Prorate the personal exemptions for nonresident and part-year resident taxpayers based on the ratio of Wisconsin AGI to federal AGI.
D. Rates and Brackets. Create a fourth income tax bracket and reduce the tax rates in tax years 2000 and 2001. The rate and bracket schedules under current law for tax years 1999 and 2000 and under the Governor's proposal for 2000 and 2001 are shown below. The current law bracket amounts for 2000 reflect two years of indexing over the 1998 brackets; these amounts will continue to be adjusted for changes in inflation in tax year 2001 and thereafter. Under the Governor's proposal, the tax brackets would be indexed for changes in inflation in tax years 2002 and thereafter.
