Other Views: Wherever they reside, Foxconn workers will boost Wisconsin tax collections
The Foxconn deal recently announced by Gov. Scott Walker is a great deal for the people of Wisconsin.
It will create up to 13,000 ongoing, family-supporting jobs at the Foxconn plant. It will generate tens of thousands of additional construction and supply chain jobs throughout Wisconsin. The company will produce state-of-the-art, high-tech products, made in America, right here in Wisconsin—highlighting our state’s strengths and capabilities.
It’s also a good deal for the state’s balance sheet, contrary to concerns raised in an Aug. 9 Gazette editorial. The workers at the Foxconn plant will generate additional income tax revenues for Wisconsin—including workers who live in Illinois.
The vast majority of the Foxconn workers will be Wisconsin residents, but some will commute here from Illinois. It’s important to understand that Wisconsin will receive income tax payments for all the Foxconn employees, wherever they reside.
Everybody who works in Wisconsin and earns money here owes Wisconsin income tax on those earnings. In most cases, nonresident workers file Wisconsin nonresident income tax returns and pay the taxes they owe directly to Wisconsin, as well as filing tax returns in their home states.
In the case of Illinois, we have an income tax reciprocity agreement so that Wisconsin residents who work in Illinois do not have to file income tax returns there, and Illinois residents who work in Wisconsin do not have to file tax returns here.
Instead, they only file returns in their home state. We then calculate how much the Illinois residents would have paid in Wisconsin taxes, and how much the Wisconsin residents would have paid in Illinois taxes, and the states agree to pay those amounts to each other at the end of each tax year.
This means that Illinois residents who work in Wisconsin are paying income taxes to Wisconsin through the income tax reciprocity mechanism, even though they file their returns in Illinois. Illinois collects taxes from them and then sends us the amount they owe on their Wisconsin earnings.
The Foxconn deal will benefit the people of Wisconsin in many ways—including income tax collections on the wages paid to Foxconn workers, wherever they reside.
Richard G. Chandler is secretary of the Wisconsin Department of Revenue.