Gov. Scott Walker: Wisconsin will collect online sales taxes and then cut other taxes by same amount

Patrick Marley | Milwaukee Journal Sentinel

MADISON - Gov. Scott Walker signaled Monday the state would start collecting sales taxes for internet purchases — but offset any new money with cuts to other taxes by the same amount.

“It shouldn’t be a tax increase. It should be leveling the playing field for retailers and other operations in the state,” Walker told reporters after touring the University of Wisconsin-Madison’s dairy operations at Babcock Hall.

The U.S. Supreme Court last week ruled states could collect taxes for online sales far more broadly than had been allowed under a 1992 decision. Wisconsin could take in $123 million to $187 million a year from online sales taxes, according to a 2017 review by the U.S. Government Accountability Office.

The GOP governor told reporters he favored collecting the money, but wanted to tie it to tax cuts of the same size so the state doesn’t take in more money overall.

Wisconsin's sales tax is 5%. Milwaukee County and 65 other counties charge a 0.5% sales tax and some special tax districts — such as the one for Miller Park — charge a 0.1% sales tax.

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In 2013, Walker and lawmakers adopted a budget provision that said if the state started collecting online sales taxes, it would cut income tax rates by a like amount.

Walker and Revenue Secretary Rick Chandler said they are reviewing whether the court decision triggers that provision in state law. If it does, the state will begin collecting online sales taxes and reduce income tax rates.

If it doesn’t, Walker said he would likely include a provision in the next state budget to collect the online sales taxes and offset them with tax cuts, possibly aimed at parents or senior citizens.

"One way or the other, we want to give that back to the hard-working taxpayers of the state," he said. "How we do that I think will be part of a larger discussion later this summer going into the fall for the next state budget."

Assembly Speaker Robin Vos (R-Rochester) said he believed the court decision would trigger the state law that would result in lower income tax rates. If it doesn’t automatically do that, he said he would like to adopt an income tax cut or another broad-based tax reduction rather than one targeted for specific taxpayers.

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If the Legislature must act on the issue, it probably won’t happen until after the fall elections. Eight Democrats are running in the Aug. 14 primary to challenge Walker this fall and if one of them won, they would have a say in how to handle the issue.

In 1992, the Supreme Court ruled states could collect online sales taxes only for retailers who have a connection to a state, such as with a physical presence. Last week’s 5-4 decision reversed that finding and said states could broadly collect sales taxes on internet purchases.