The Joint Finance Committee heard and passed a modified version of one of Gov. Scott Walker’s special legislative session bills Thursday, which deals with a tax credit plan for small businesses and a tax incentive to create jobs in Wisconsin.
The vote followed party lines, 12-4, and approved a change to the original bill.
Special session bill seven, the Individual Income and Corporate Income/Franchise Taxes – Small Business Tax Credit bill, creates a tax credit for small businesses, according to a report by the Legislative Fiscal Bureau.
The most prominent bill creates a tax credit for small businesses, according to a report by the Legislative Fiscal Bureau. Finance committee co-chair Alberta Darling, Republican senator of River Falls, said the passage was a victory for Walker’s jobs plan.
“Governor Walker and legislative Republicans are working together to make it easier for small businesses to create jobs,” Darling said in a statement.
Businesses with total yearly revenue of $250,000 or less would receive a 15 percent tax credit. If a business makes more than $250,000 but less than $500,000, it will receive a modified tax credit. Those businesses with gross receipts of more than half a million dollars will be unable to claim any credit, according to the LFB report.
The bill is expected to reduce state income and corporate franchise taxes by close to $80 million over the next two years.
The amended version of the bill adds additional fiscal strain.
As an incentive for businesses to create jobs, the amendment allows businesses to subtract money from their income as full-time employees are increased. A business making less than $5 million can subtract $4,000 from its income for every new employee hired. Businesses making more than that can subtract $2,000 per employee, according to the report.
The report predicts the finished bill would decrease income and franchise tax revenue by $33.5 million annually.
Sen. Lena Taylor, Democrat of Milwaukee and member of the finance committee, said she is worried by the fiscal estimates.
“The GOP are acting like a drunken college kid who has their parents credit card. And within a few weeks, that credit card is maxed out. But someone’s got to pay that bill,” Taylor said in a statement. “We, as a Legislature, need to act in a fiscally responsible way to make sure we’re not spending ourselves into a fiscal abyss.”