Wisconsin Fights the Feds

The state is defying a moratorium on Internet access taxes.
by | May 2005

Even though the U.S. Congress passed legislation last year meant to stop Wisconsin from collecting taxes on Internet connections, Governor Jim Doyle has no intention of calling it quits.

Wisconsin has been taxing Internet access for the past 14 years. The past two times that Congress passed moratoriums on Internet access taxes, Wisconsin and five other states were grandfathered in because they already had their tax in place.

This third moratorium was authored by Wisconsin Congressman Jim Sensenbrenner and aimed squarely at his state. It requires any state that enacted the tax on October 1, 1991, or afterwards, to stop collecting it by November 1, 2006. The other states already were required to stop collecting Internet taxes by 2007.

But there's a one-word catch in the latest law.

Wisconsin's tax took effect on October 1, 1991, but it was enacted two months earlier. So Governor Doyle claims the federal legislation doesn't apply to his state. "The language is very clear," says Audra Brennan, spokeswoman for the Wisconsin Department of Revenue. "It's not open to interpretation." Nor does the Doyle administration want it to be. With the state facing a two-year shortfall of $1.6 billion, the Internet tax brings in close to $37 million a year.

Sensenbrenner says the intent of Congress was clear and that Internet taxes hamper job creation. But Brennan points to several business- friendly initiatives in the state that she says prove job creation is a priority in Wisconsin.


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