Brian Dake

Business groups, federal lawmakers and public officials’ associations have signed on to support South Dakota’s legal bid to collect sales taxes from out-of-state internet retailers.

South Dakota is asking the U.S. Supreme Court to review whether retailers can be required to collect sales taxes in states where they lack a physical presence. The case could have national implications for e-commerce.

South Dakota Attorney General Marty Jackley’s office said this week that organizations ranging from the National Governors Association to the National Retail Federation have filed friend-of-the-court briefs supporting South Dakota’s petition to the high court.

The state is seeking to overturn legal rulings issued mostly before the online shopping boom.

Thirty-six attorneys general from states including Colorado, Minnesota, North Dakota and Wisconsin have also filed a friend-of-the-court brief.

Ajit Pai, the Republican chairman of the Federal Communications Commission (FCC), announced on Tuesday that the FCC will vote to roll back Obama-era net neutrality rules that require internet service providers to treat all web traffic equally. Pai in a statement blasted the rules as “heavy-handed, utility-style” regulation of the internet imposed by Democrats.

Today, I have shared with my colleagues a draft order that would abandon this failed approach and return to the longstanding consensus that served consumers well for decades,” Pai said. “Under my proposal, the federal government will stop micromanaging the Internet.”

“Instead, the FCC would simply require Internet service providers to be transparent about their practices so that consumers can buy the service plan that’s best for them and entrepreneurs and other small businesses can have the technical information they need to innovate,” he said.

The commission will vote on the proposal at its Dec. 14 meeting. With Republicans holding three of the FCC’s five seats, the repeal is expected to pass.

Pai said he would release the full text of his plan to the public on Wednesday, but he made clear that he believes the Federal Trade Commission is better equipped to police internet service providers than the FCC.

Two Democratic legislators, Rep. Melissa Sargent, D-Madison, and Sen. Bob Wirch, D-Somers, introduced a bill Friday to increase the state minimum wage to $15 over the next five years.

Under this bill, the minimum wage would gradually increase to $15 each year over a five-year time period. After the five-year period ends, the bill will require the Department of Workforce Development to adjust minimum wage income annually to match the trends of the current economy.

The two Democratic lawmakers introduced a similar bill together in the last legislative session, but it did not pass.

Sargent admits the bill faces a partisan legislature, but she argues introducing these types of bills can “change the fabric of the state” even though they might not pass because it allows people to think and talk about issues that matter to them.

“The people of Wisconsin are asking for this [minimum wage] bill to be introduced,” Sargent said. “Folks are overwhelmingly saying ‘It’s time to increase the minimum wage to $15 an hour.’ It’s my job as a legislator and people’s servant to hear the voices of the people and bring what is that they find important [into] the building to discuss.”

The co-sponsorship period for this bill ends Dec. 1. The bill has not yet been scheduled for a committee hearing.

Planned spending in the recently enacted 2017-19 state budget departs from recent patterns in two important ways. First, general fund expenditures rise 8.8% over the two years, the largest biennial increase since 2009-11 (12.1%). Second, much of the increase is for school aid, which has grown less in recent years. K-12 aid will grow 8.3% over two years, the largest biennial jump since 2005-07 (9.0%). These are two important findings from a new review of the 2017-19 state budget, “Decisions Made, Questions Deferred,” from the Wisconsin Taxpayers Alliance (WISTAX).

State general fund appropriations are budgeted to increase from $15.9 billion in 2017 to $16.6 billion in 2018 and to $17.4 billion in 2019. Over half of all general fund expenditures go, not to fund state services, but to aid local governments, WISTAX noted. Another 26% aids individuals and organizations, particularly Medicaid for the poor and disabled. State operations, including the U.W. System, consume the remaining 24%.

The state’s largest expenditure is for K-12 school aid, which grows significantly over the next two years. School aids are rising 3.4% ($187.4 million) this year and 4.7% ($264.3 million) in 2019 to $5.9 billion. School aids rose 5.6% and 3.9%, respectively, during the prior two biennia. Nearly all of the additional dollars are directed into a relatively new “per pupil” aid, rather than into the much larger equalization aid formula; this is a major shift in school funding.

Two other areas claim the bulk of remaining new spending. The budget uses income and sales taxes to reduce property taxes. It eliminates the state levy for forestry programs ($90 million annually) and the personal property tax on machinery, tools, and parts ($74 million); increases the school levy credit by $87 million per year, and raises the lottery credit by shifting $48 million of general fund taxes to pay lottery expenses.

As with prior budgets, Medicaid expenditures are growing. General fund spending on the program totals $6.1 billion over two years, a 4.9% increase.

Senate Republicans on Thursday unveiled a tax reform bill that breaks with the House in significant ways. If the House Republican bill was a first draft of tax reform, the Senate bill is the first rewrite.

Here are the key differences between the Senate and House bills.

State and local taxes 

The Senate bill will entirely repeal the deduction for state and local taxes, making no exception for property taxes. The House bill would allow deductions up to $10,000 for property taxes.

Home mortgage interest deduction

The Senate would keep in place the deduction for newly purchased homes up to $1 million while the House plan would cut the threshold to $500,000.

Popular tax credits and deductions

The Senate would keep in place a variety of popular tax credits and deductions that would have been eliminated by the House tax bill released last week. It preserves tax credits and deductions for adoption, medical expense, teacher expenses, and student loan interest.

Tax brackets

The House bill would condense the number of tax brackets to four: 12 percent for income up to $90,000; 25 percent for income up to $260,000; 35 percent for income up to $1 million; and 39.6 percent for income over $1 million.

The Senate bill would establish seven tax brackets at 10 percent, 12 percent, 22.5 percent, 25 percent, 32.5 percent, 35 percent and 38.5 percent for the nation’s highest income earners.

Estate tax

The Senate bill would double the estate-tax exemption for wealthy estates from $11 million to $22 million per couple (or from $5.5 million to $11 million per individual) while the House bill would repeal the estate tax entirely.

Corporate tax rate

The Senate would cut the corporate tax rate to 20 percent, like the House would, but delay its implementation until 2019 to reduce the projected cost of the bill over ten years. The House would cut the corporate tax rate next year.

Pass-through businesses

The Senate would establish a 17.4 percent deduction for pass-through businesses based on the Section 199 domestic manufacturing deduction that would lower the effective tax rate for small businesses in the top tax rate to slightly more than 30 percent, according to Senate Finance Committee aide.

The House bill, by contrast, would have established a 25 percent rate for pass-through companies but would only make 30 percent of their revenue eligible for that rate and tax the other 70 percent as wages under the individual tax rate. That would result in a blended rate for many small businesses between 35 percent and 38 percent.

Assembly Speaker Robin Vos is creating a new committee in the Wisconsin State Assembly that will focus on building better international relations in order to attract foreign investment in Wisconsin.

The Assembly Committee on International Affairs and Commerce is tasked with developing policy initiatives to promote international trade, communication, tourism and investment.

“Wisconsin is competing on a world stage and we want our state to be in the best possible position to grow more family-supporting careers,” said Speaker Vos. “I’m confident that Rep. (David) Steffen will do an excellent job leading the new standing committee.”

The committee’s main goal is to help more Wisconsin companies and farmers achieve international success.