Evers was ready to tax small businesses where they hurt
Governor Tony Evers was ready to force tens of thousands of small businesses on the brink of extinction to pay taxes on the “forgivable” Paycheck Protection Program loans they received. When the public caught wind of the state Department of Revenue’s plan to grab hundreds of millions of dollars in tax collections, Evers changed his tune and signed a Republican-led bill protecting PPP loans from the tax man.
The Department of Revenue in January quietly issued guidance that ignored federal COVID-19 relief legislation language on tax liability.
Then they got caught.
“Gov. Tony Evers and the DOR are looking to skim the federal money that came down to our small businesses so they can grow the coffers in Madison,” state Sen. Roger Roth (R-Appleton) told Empower Wisconsin in an interview at the time.
In a letter to his Senate colleagues, Roth called for amending Senate Bill 2 to align Wisconsin’s tax treatment of PPP loans with that of the federal government.
Last year, when congress passed the bipartisan CARES Act, it intended the PPP to be a forgivable loan program, as long as the money was used to cover payroll, mortgage interest, rent and other business-related expenses for eligible recipients.
That means complying businesses don’t have to pay taxes on the money they receive.
The goal of PPP was to provide businesses with a financial lifeline to keep them operating — and paying their employees — in the COVID-19 pandemic, not to create a tax burden for those receiving the funds.
But Evers’ Department of Revenue was prepared to subject some 90,000 Wisconsin businesses — the vast majority of small businesses — to an additional $450 million in taxable liability at the state level.
The Evers’ administration plan was salt in the wounds to businesses hurt not only by the virus but by the restrictions Evers and local health officers placed on public gatherings and travel. The Evers administration joined local governments in capping the number of customers that bars, restaurants and many retailers could welcome, and effectively closed taverns for periods of time.
“These guys played by the rules. These businesses, and most are small businesses — the hair dresser down the street, the local hardware store, bars, restaurants — were forced to upend their business model because Tony Evers told them they had to,” the senator said. “The federal government did the right thing in the urgency of the moment … Now the state of Wisconsin isn’t allowing them to deduct their expenses.”