Wisconsin – Sales Taxes from Online Shopping have Soared During the Pandemic, but it Won’t Help the State’s Bottom Line

With stores closed during the COVID-19 pandemic, online sales have soared. But instead of giving a financial boost to the state in the form of sales taxes, the shift toward e-commerce will instead result in an income tax cut required under state law, according to a Wisconsin Policy Forum report released Wednesday. 

The pandemic has battered the state’s economy, with businesses losing millions of dollars in revenue and thousands out of jobs. Most of the state’s main tax collections have declined in recent months compared to 2019, according to the nonpartisan research group.

However, rather than boosting the state’s bottom line, the additional revenue will be used to cut income tax rates under state law. That means people will get a modest break on the income taxes they pay next year — and the state’s budget won’t see any benefit from the increased tax collections on online sales this year.

While sales taxes are being paid and collected right now, the income tax cut won’t be realized by many until they file their taxes in early 2021.

Before the pandemic, state officials were already projecting a large tax cut generated by online sales — around $119 million — for 2020. That’s up $77 million from 2019.

For more information: Milwuakee Journal Sentinel

Milwuakee journal sentinel
by Allison garfield
June 17, 2020