(The Center Square) – The calls for lawmakers to protect business owners across Wisconsin from a Paycheck Protection Program tax are growing louder. 

The state’s largest business group, Wisconsin Manufacturers & Commerce, on Thursday said Gov. Tony Evers’ plan to force the Department of Revenue tax to PPP grants provided to the state is a $450 million surprise. 

“Congress never intended for these loans to be taxable. There is no evidence the state legislature did either,” WMC’s Cory Fish said. “Policymakers should not allow DOR to ‘sleep walk’ into a tax increase that no one ever intended to be enacted.”

The Department of Revenue quietly released a rules update this month that put nearly 90,000 businesses in the state, many of them small businesses, on notice that they will be taxed on any PPP loans they received. 

The loans are supposed to be tax free. Congress clarified that in its latest round of federal stimulus money to the states. 

Americans For Prosperity Wisconsin state director Eric Bott on Thursday said Gov. Evers is apparently ignoring that fact. 

“The Paycheck Protection Program established by Congress promised businesses tax free loans to cover employees’ paychecks during the unprecedented pandemic, to help businesses suffering at no fault of their own and mitigate the economic impact of government-mandated shutdowns,” Bott said. “But now after businesses have spent these tax free loans to protect their employees’ paychecks, Governor Evers and his administration are trying to punish them.”

Bott said many small businesses in Wisconsin will have trouble surviving both Gov. Evers’ coronavirus restrictions and shutdown, and a surprise tax on their PPP loans. 

“Countless small businesses in Wisconsin have been forced to close their doors permanently and many others have barely survived with the help of these tax-free loans,” Bott added. 

Republicans in the Wisconsin legislature have a plan drafted that would clarify PPP money is to be tax free, That legislation has already had a public hearing, but it has not come before a Senate panel for an official vote. 

Fish with WMC said Wisconsin just received good news about better than expected tax receipts and a larger rainy day fund. He said Gov. Evers does not need to tax small businesses to grab even more money. 

“It was just reported that Wisconsin will have more than $1 billion in additional revenue, Fish added. “With such a large surplus, lawmakers should take this opportunity to ensure small businesses are not hit with hundreds of millions of dollars in unexpected taxes.”

Benjamin Yount reports on Illinois and Wisconsin statewide issues for The Center Square. Reposted with permission.