Wisconsin has a surplus, so Governor Scott Walker wants to give something back to taxpayers. In his 2018 State of the State address, he proposed a one-time $100 child tax credit for every child under 18 who lives at home. On top of that, he and Assembly Speaker Robin Vos have agreed to offer a one-time sales tax holiday in 2018. The child tax credit is expected to cost the state $122.1 million in fiscal year 2018; the sales tax holiday would reduce sales tax collections by approximately $50 million in fiscal year 2019.
The governor announced the one-time child tax credit and sales tax holiday on February 8: “As I promised, when we have a surplus, we will give it back to you. It’s your money. So, if you’ve got three kids at home under the age of 18, that’s $300 more this year for new shoes, coats, activity fees at school, or a co-pay at the doctor or dentist. Plus, we want to provide a sales tax holiday which comes right in time for back-to-school supplies.”
The sales tax holiday is a way to give back to Wisconsinites who don’t have children: It would exempt from state sales tax most retail “off the shelf” goods with a sales price of $100 or less, not just items parents typically purchase for children at the start of each school year. Speaker Vos: “I don’t have any children and there’s a lot of Wisconsinites who don’t. They would also have the chance to get back some of the sales tax that they pay in back in a different form.” He also believes a tax-free period would be “a creative way to stimulate the economy.”
The proposed tax-free period would run August 4–5. It would not apply to sales of the following: alcohol, motor vehicles or motor vehicle parts, prepared food, taxable services, or tobacco products. Tangible or intangible property used to access telecommunications services or provided by a utility would also be excluded from the sales tax exemption.
This isn’t the first time a Wisconsin sales tax holiday has been proposed: The Legislature considered a back-to-school sales tax holiday in 2016, but it failed to garner the necessary support. It remains to be seen whether the 2018 holiday will come to pass. Indeed, Senate Majority Leader Scott Fitzgerald is working on a child tax credit bill that excludes the sales tax holiday. And Assembly Minority Leader Gordon Hintz called the proposal “an election year bribe.”
At least 15 states will offer more than 20 sales tax holidays in 2018. While this keeps a bit more money in the pockets of taxpayers, it complicates sales tax compliance for businesses selling affected goods in these states. Learn more.