On Tuesday, April 25th, 2023, Shareholder Thomas J. Nichols testified at the State Capitol in Madison, Wisconsin, before the Senate Committee on University and Revenue members regarding tax policy and income tax rates. The public hearing discussed two Senate Bills, Senate Bill 1 (SB1) on establishing a flat individual income tax rate and Senate Bill 2 (SB2) on eliminating the personal property tax. The focus of Mr. Nichols’ testimony was regarding Senate Bill 1 on the establishment of a flat individual income tax rate.
Mr. Nichols voiced his support for establishing a flat income tax rate in connection with Wisconsin’s pass-through businesses such as S corporations, partnerships, and sole proprietorships. Statistics show that S corporations have grown to constitute well over 70% of all corporations within the nation and that S corporations and partnerships represent roughly 85% of the business entities in the nation. Mr. Nichols continued, “When you add in sole proprietorships, the percentage of pass-through businesses is well into the 90 %s. Nationwide, pass-through businesses employ almost 2/3 of the working men and women in the United States.”
In his testimony, Mr. Nichols stated that 82.7% of Wisconsin’s employees work for privately-held employers, placing Wisconsin in the upper 3rd of privately-held employment concentration. Therefore, it is crucial for Wisconsin to get the taxation of privately-held pass-through businesses right. In addition, the Committee must consider that Wisconsin competes with all 49 other states to attract and retain businesses. Mr. Nichols states, “It is important to note that it is this rate that successful entrepreneurs will focus on in deciding the state in which to locate, because it will directly affect the amount of pretax profits they will be able to retain and/or reinvest in the business.”
To watch Mr. Nichols’ full testimony, the recorded public hearing is posted via Wisconsin Eye here.