WisBusiness: Governor’s budget offers business incentives along with tax hikes

By WisBusiness Staff

While it raises some business taxes, the budget proposal unveiled Tuesday night by Gov. Jim Doyle will also provide incentives to investors, businesses that expand research and development investment, and those that create jobs.

Among a host of initiatives to beef up Act 255 tax credits for angel investments, Doyle proposes raising the cap on the credits from $1 million to $4 million. The proposal will allow entrepreneurs to choose any mix of eligible angel and venture capital, and provide the Department of Commerce more flexibility to respond to uneven demand in angel and venture credits. The change would be implemented retroactively for tax year 2008.

Doyle also proposes permitting the Department of Commerce to certify up to 10 percent full-time payroll credit for as many as 10 years for businesses creating Wisconsin jobs. Training costs would also be eligible to earn credits.

The provision breaks the credits down into two categories, Tier 1 and Tier 2 counties and municipalities. In Tier 1, Commerce can award up to 10 percent of full time payroll above $20,000 and below $100,000 per employee. In Tier 2, the credit can be awarded to 10 percent of full time payroll above $30,000 and below $100,000. The total program cost will be capped at $10 million per year.

Doyle’s proposal provides businesses that increase research and development by more than 125 percent of their three-year research and development average with an income and franchise tax credit worth one dollar for every one dollar of investment above 125 percent. Under the proposal, if a business spends an average of $3 million on research and development over a three-year period, and in the next year increases its expenditures to $5 million, it would receive a credit worth $1.25 million.

The governor has stressed the benefits of a modernized transportation infrastructure and in his two-year budget plan, Doyle put that emphasis into sharp focus. His budget includes provisions to implement a tax on oil companies to pay for highway improvements, establish regional transit authorities in three major urban areas, funding for Amtrak service improvements between Milwaukee and Chicago and establishing a commuter rail line between Milwaukee and Madison.

The budget also includes $569 million in new funding for road projects, a 19.6 percent increase over the previous biennium. The bulk of the funding increase comes from approximately $529 million provided to the state through the federal stimulus bill.

The oil franchise fee, now dubbed the “oil company profits tax,” was originally proposed in Doyle’s previous biennial spending plan but was thwarted by Republicans who controlled the Assembly. The graduated tax would pull in $272 million in revenue each year from oil companies gross receipts, Doyle’s budget office projects.

Republicans say Doyle’s $62.7 billion two-year budget plan will hammer taxpayers of all sorts.

Doyle told lawmakers at the Capitol last night, “My budget stands up for the people who earn regular paychecks and the people who, through no fault of their own, have lost theirs.”

Senate Minority Leader Scott Fitzgerald, R-Juneau, turned one of Doyle’s favorite phrases to jab him on tax increases.

“I heard the governor say that Wisconsinites don’t curl up and hide beneath the covers. But I think taxpayers better do that,” Scott Fitzgerald said. “Between the stimulus bill and what the governor just (presented), the taxpayers are certainly going to feel it.”