Stimulus programs proposed in state budget

Joe Leibham  9th Senatorial District

Making our state a more attractive place to create private sector jobs continues to be a top priority of Governor Walker and the legislature. Governor Walker has proposed the following budget initiatives to stimulate investment, consumption, business development and job growth:

Middle Class Income Tax Cut- Governor Walker proposes to reduce income taxes by $343 million over the next two years. While all income taxpayers in the state would be able to benefit from this cut, the major focus is on tax relief for middle income tax filers. Under the proposal, taxpayers with Adjusted Gross Income (AGI) of between $50,000 and $60,000 per year, for example, would see an average tax reduction of $67 per year. Taxpayers with an AGI of between $25,000 and $30,000 would see their income tax liability decrease by an average of 3.3%, the highest percentage under the proposal.

Angel Investment Program- Another provision in the budget would remove the lifetime cap on Wisconsin’s angel investment tax credit program, which is currently $47.5 million. The goal of this program is to stimulate private investment in new Wisconsin companies at the earliest levels of development. These companies are in desperate need of capital to grow and create jobs, and the Angel

Investment Program has been hugely successful in the past at stimulating capital investment. Under current law, once $47.5 million in tax credits have been awarded under this program, the program dies. In the past, I have been the lead author of legislation to remove this arbitrary lifetime cap.

Tax Credit Modifications- The budget proposes to make a series of improvements to the ad- ministration of various tax credit programs in Wisconsin. These various changes would clarify eligibility for credits, modify calculations used to receive credits, expand eligibility, provide for additional credits to be awarded, and make other technical changes. In the past, I have authored legislation to make many of these changes. In Wisconsin, targeted tax credits can be useful instruments for attracting and retaining job creators in Wisconsin. It is important that our tax credits are awarded in an efficient, effective, and transparent manner and these changes are intended to improve that process.

Investment Capital- The budget would provide $25 million for developing an investment capital program in Wisconsin. The goal of such a program, which legislators have been working on for the past few years, would be to provide capital investment to emerging businesses across Wisconsin. Under this proposal, the state would join private investors to provide capital to emerging businesses in Wisconsin.

Disabled Veteran Tax Credits The budget would continue a new program that provides a tax credit for hiring unemployed disabled veterans. Under the program, employers are eligible for a tax credit of up to $4,000 for each unemployed disabled veteran that they hire. Created last session, the goal of this program is to increase employment opportunities for veterans, especially those returning from service in Iraq and Afghanistan who experience unemployment rates above that of the general population.

Early Stage Business Development The budget would provide funding for two critical services to early stage businesses beginning to establish themselves. The total funding would be $17 million, and would be used by the Wisconsin Economic Development Corporation (WEDC) for marketing operations, as well as capital catalyst and seed accelerator programs. These programs provide important services, technical assistance, advice, and investment to start-up companies in Wisconsin.

Tourism Expansion- The budget would provide increases in tourism funding for marketing through the various media sources that our Department of Tourism currently uses to attract visitors to come and spend money in our state. Particularly important is funding devoted to specifi- cally attracting large conventions and sporting events to Wisconsin. This would be coupled with marketing funding from WEDC used to lure businesses in other states to relocate in Wisconsin. Continuing to brand Wisconsin as a fun tourist destination that also offers a business environment that is turning around is essential to growing our economy.

These are a few of the major economic development initiatives in Governor Walker’s budget designed to help create jobs in our state. Over the next few months, I will be reviewing these provisions, along with the rest of the budget, as I continue to consider the Governor’s proposal. As always, I welcome your input on these and other important issues.

~ Issue Corner: Expanding the Tax Exemption for Retirement Plan Income ~

A proposal to expand the tax exemption for retirement plan income has been introduced for consideration. This bill aims at addressing concerns about high taxes for senior citizens and retirees, most of whom live on a fixed income.

Under current law, the first $5,000 of an individual’s retirement income is exempt from taxation, but only if the individual is 65 years or older and their adjusted gross income is $15,000 ($30,000 if married) or less. Also, income from certain pensions, such as the U.S. Civil Service System, U.S. Military Employee Retirement System, and the Wisconsin State Teachers’ Retirement Fund are currently exempt from state taxation.

Under this bill, the current exemption would remain in place through tax year 2014. Beginning in tax year 2015 and thereafter, the exemption would remove the age and income requirement. In tax year 2016, the exemption amount would increase from $5,000 to $10,000, provided that income is not already tax exempt. In tax year 2017, the exemption amount would increase to $15,000. When fully implemented in 2018, this bill would exempt the first $20,000 of an individual’s retirement income from taxation.

The author of the bill believes that this will encourage more senior citizens and retirees to stay in Wisconsin so that their resources, years of experience, and knowledge can continue to benefit our state.

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