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Bill would eliminate last remains of Wisconsin's tax on personal property.

Byline: Nate Beck

A bill being circulated in the state Legislature would wipe out the last vestiges of Wisconsin's tax on personal property, a category that includes construction equipment.

The proposal, put forward by Sen. Duey Stroebel, R-Cedarburg, would go beyond lawmakers' previous attempts at chipping away at the tax by doing away with it entirely. Very little of the tax, in fact, remains in place.

As recently as two years ago, lawmakers passed a bill eliminating personal-property taxes for construction equipment, machined parts and similar property, a change expected to save the affected businesses $75 million a year. But, to elimination advocates' dismay, the tax was left in place for desks, office chairs and similar sorts of property.

By eliminating the tax altogether, advocates say, the latest bill would lift a burden that falls heavily on small and medium-sized businesses. John Jacobson, government and member-relations director at Wisconsin Property Taxpayers, a group organized to unravel the charge, said the tax is now like "Swiss cheese." That's especially true since lawmakers have largely eliminated personal-property taxes for certain industries, such as manufacturing and agriculture.

"It's just a relic," Jacobson said. "There's no reason that it's still on the books. It's really a non-partisan issue."

But elimination won't come without a cost. Stroebel'sbill would spend $320 million over the next two years to compensate local governments for revenue they'll lose if the tax goes away. Stroebel's office stopped soliciting co-sponsors on Wednesday and plans to introduce the bill next week.

His proposed legislation is the latest attempt in a decades-long effort to whittle away at the personal-property tax.The state, for instance, eliminated the tax for manufacturing equipment in 1974. Because of the successive exemptions, more than 95 percent of Wisconsin personal property is now exempt.

For many construction companies, the personal-property tax is largely dead. JR Reesman, chairman of The Reesman company, a contractor with its headquarters in Burlington, said his company was able to avoid paying "heavy" taxes after the personal-property tax was repealed for most construction equipment two years ago.

And beyond the simple cost of the tax, it was difficult simply to tally how much was actually owed. For every piece of equipment it owned, Reesman had to keep of depreciation, a task that could take a lot of time.

The tax was particular onerous during the depths of the Great Recession, when Reesman and many other construction were struggling to stay in business.

"It didn't matter, you could be on the floor totally bled out and still have to pay it," Reesman said. "In 2009, 2010 everybody in the construction industry was hurting pretty bad. And to have to pay that tax on top of it felt punitive."

With the savings from the tax's repeal two years ago, Reesman said his firm bought new equipment and put more money into his business.

But even with the current exemption for construction equipment, some contractors haven't taken full advantage of it, said John Schulze,director of government and legal affairs at the Associated Builders and Contractors of Wisconsin. Getting rid of the tax entirely eliminates uncertainty.

"It's nice to cut a tax," he said. "But killing a tax is kind of the goal."

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Publication:The Daily Reporter
Geographic Code:1U3WI
Date:May 23, 2019
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