Recently, the Minnesota Department of Revenue decided to cancel the state’s reciprocity agreement with Wisconsin. As you may have read in our analysis of the Governor’s unallotment plan to balance the state’s FY 2010-11 budget,
The Governor’s unallotment plan includes an additional $106 million in tax revenues in FY 2010-11 by asking the State of Wisconsin to reimburse the State of Minnesota sooner under an existing reciprocity agreement. Under the current reciprocity agreement, Wisconsin residents who work in Minnesota file their state income taxes in Wisconsin, and Wisconsin remits those taxes to Minnesota after a 17 month delay.
The impact of ending this agreement?
- For the state, it means $131 million in revenue in FY 2010-11, more than the state was hoping to raise by renegotiating the agreement. This is because there no longer will be a delay in receiving the revenue.
- About 13,000 Minnesotans and 33,500 Wisconsinites who live in one state but work in the other will need to file income taxes in both states in 2010. The Minnesota Department of Revenue notes that “No Minnesota resident will pay more in Minnesota tax, but some who work in Wisconsin will pay more Wisconsin taxes.” (More information for these workers and impacted employers is available from the Minnesota Department of Revenue.)
First Brett Favre, now the reciprocity agreement. What help will we ask Wisconsin to send us next?