Wisconsin Governor Says to Cut Income Tax if Internet Sales Tax Passes

Published May 16, 2013

Wisconsin Governor Scott Walker (R) says the state should use additional revenue it might receive from Internet sales taxes to cut the state’s income tax.

“I want to make clear, should federal Marketplace legislation become law, my intention would be for any resulting additional revenue be used to provide individual income tax relief for Wisconsin’s taxpayers,” he wrote in a letter to lawmakers dated May 15.

Walker was referring to the Marketplace Fairness Act, which has passed the U.S. Senate and is awaiting action in the U.S. House. The bill would allow states to force online and catalog retailers to collect sales tax on every purchase, even when a buyer is from a state where the retailer has no physical presence. The sales tax would be based on where the buyer is located.

Currently, online and catalog retailers must collect tax only from customers in states where they have a physical presence. Traditional retailers say this is unfair because they must collect tax on every sale. However, they collect tax based on where their stores are located, not on where their shoppers are from. Online and catalog retailers would have to comply with nearly 10,000 sales tax jurisdictions.

The Ohio House has already passed a bill that includes language to reduce that state’s income tax automatically if the state receives additional revenue from Internet sales taxation.

Steve Stanek