Friday, November 28th, 2014

Walk-O-Meter

Begin to phase out state tax on retirement income

Will "work to begin phasing out the state tax on retirement income to help keep investment capital in Wisconsin instead of watching it go to states like Florida and Arizona."


Subjects: Economy, Retirement

Updates

Many tax reforms enacted, but this one did not make it through

With just four months left before the end of his term, and the Legislature adjourned until 2015, it would be a stunner to see more major tax legislation adopted in 2014.

Gov. Scott Walker has achieved much of his tax-cutting agenda, but not his 2010 promise to "work to begin phasing out the state tax on retirement income to help keep investment capital in Wisconsin instead of watching it go to states like Florida and Arizona."

Laurel Patrick, a Walker spokeswoman, told us that a Republican senator, the now-retired Neil Kedzie, sponsored related legislation but that it did not pass.

We're moving this one from Stalled to Promise Broken.

Sources:

Email exchange with Laurel Patrick, governor's office, Sept. 5, 2014

Another budget passes without progress

As a 2010 candidate for governor, Scott Walker said that as the state's chief executive, he would aim to make Wisconsin more like havens for retirees.


"I will work to begin phasing out the state tax on retirement income to help keep investment capital in Wisconsin instead of watching it go to states like Florida and Arizona,” he promised.


But a question-and-answer section on the state Department of Revenue's website still reads:


"Are my retirement benefits taxable? If you are a full-year resident of Wisconsin, generally the same amount of your pension and annuity income that is taxable for federal tax purposes is taxable by Wisconsin. If you are a part-year resident of Wisconsin, the pension and annuity income you receive while a Wisconsin resident is generally taxable in the same manner as it is for federal tax purposes."


Walker press secretary Tom Evenson noted that Walker's 2013-"15 budget continues a reduction in state tax that began in 2009 when Wisconsin adopted federal limits on taxes that apply on pension and IRA contributions.


But that dates to an action by former Gov. Jim Doyle, not Walker, and does not move the state toward eliminating the state tax on retirement income.


Evenson also argued that seniors, like other taxpayers, benefit from the across-the-board in income tax rates contained in the 2013-"15 budget and that "this is a beginning to phasing out state tax on retirement income."

But there has been no measure targeted toward phasing out completely the income tax on retirement income. We keep our rating at Stalled.

Sources:

Email interview, Gov. Scott Walker press secretary Tom Evenson, July 11, 2013


Email interview, Wisconsin Taxpayers Alliance president Todd Berry, July 11, 2013

Wasn't in first budget -- or now the second

As part of a multi-pronged tax reduction strategy outlined in the 2010 race, Scott Walker called for Wisconsin to head down the road of eliminating its state tax on retirement income.


"I will work to begin phasing out the state tax on retirement income to help keep investment capital in Wisconsin instead of watching it go to states like Florida and Arizona,” then-candidate Walker promised.


We located no evidence that as governor, Walker included such a tax cut in his first two budgets, which cover 2011-"15.


Some states give various breaks on pension income. Wisconsin generally does not. Wisconsin, however, does not tax social security benefits. That started in 2008.


Jocelyn Webster, Walker's communications director, pointed us to a line in Walker's 2013-'15 budget that continues a reduction in state tax that began in 2009 when Wisconsin adopted federal limits on taxes that apply on pension and IRA contributions.


But that dates to an action by former Gov. Jim Doyle, not Walker, and does not move the state toward eliminating the state tax on retirement income.

We rate this promised Stalled.

Sources:

Department of Revenue, "Federal Roth IRA conversion law adopted for Wisconsin,” March 16, 2010