There are currently several significant reforms pending in Wisconsin that will be decided by state lawmakers in the coming weeks, all of which have major taxpayer implications.
Wisconsin is one of 32 states that has a prevailing wage law on the books, which requires state and local governments to pay inflated wages for taxpayer-funded construction projects. Legislation to repeal Wisconsin’s prevailing wage law, which is supported by Americans for Tax Reform, was passed out of Assembly committee this week.
For lawmakers who are looking to save or free up taxpayers dollars, repealing the state’s prevailing wage law is low-hanging fruit. According to a Wisconsin Taxpayers Alliance study, Wisconsin’s prevailing wage law inflates wages 45 percent above market rates. The study found that the state’s prevailing wage law forced Wisconsin taxpayers to cough up $200 to $300 million in additional labor costs in 2014. The Madison-based MacIver Institute explains how prevailing wage laws cost taxpayers:
“The extra costs associated with prevailing wage are felt all across the state. In Vilas County, an ATV trail along Highway K will cost an additional $150,000 because of the archaic law. In the Village of Grafton, taxpayers were given the bill for an additional $260,000 to cover the maintenance costs of two water towers. No additional work was done in either scenario. Taxpayers simply had to pay more.”
Repealing the state’s prevailing wage law is a great way for Wisconsin lawmakers to save money and get more bang for the taxpayer buck. When Ohio exempted school projects from prevailing wage requirements in 1997, construction costs dropped by 10 percent. Gov. Scott Walker has come out in support of full repeal of prevailing wage. All that’s needed is for lawmakers to send him a bill.
Prevailing wage isn’t the only law that Wisconsin lawmakers should repeal in the coming weeks. Rep. Dale Kooyenga and Sen. Howard Marklein have introduced legislation to repeal Wisconsin’s Alternative Minimum Tax (AMT). Getting rid of the AMT would fix a major flaw in Wisconsin’s tax code.
Originally intended to apply to a small number of high-income filers, the AMT ensnares more and more Wisconsin families every year with higher taxes. In 2011, 5,900 Wisconsin taxpayers paid the AMT. In 2015, Wisconsin’s AMT is expected to jump 450 percent and hit tens of thousands of taxpayers. By repealing the AMT, Wisconsin lawmakers would both improve the state’s tax climate and protect thousands of individuals and families from being hit with higher taxes.
Wisconsin legislators have enacted a number of pro-taxpayer reforms in recent years, but there is still much work to be done and room for improvement. It will be a huge victory for Wisconsin taxpayers if bills to repeal the Badger State’s prevailing wage law and Alternative Minimum Tax make it to Gov. Walker’s desk this summer.