The same evening Governor Tony Evers planned to give a virtual budget address, the state legislature overwhelmingly voted to kill a planned Evers Administration tax on a federal Covid relief small business loan program.

Assembly Bill 2, as amended, will allow businesses to deduct the expenses that are covered by the federal Paycheck Protection Program (PPP). The expenses are deductible at the federal level and the money from the PPP was not intended to be taxed.

The bill passed on Tuesday with overwhelming bipartisan support in the Assembly (87-3) and the state Senate (27-5). The bill now goes to the governor’s desk where Evers will have to decide whether to sign it or veto the bill and raise taxes on businesses $431 million.

“It’s no secret that small businesses around the state have had to endure challenge after challenge over the last year – putting an unnecessary and unexpected tax burden on them should not be another obstacle they have to overcome,” said Assembly Majority Leader Jim Steineke (R-Kaukauna). “The PPP loans that our local businesses utilized in order to stay afloat shouldn’t now be the reason they go under.”

Eric Bott, the state director for Americans for Prosperity, issued a statement in support of the legislature’s action on Tuesday.

“We thank the Legislature for leading and taking this important step today to help protect Wisconsin businesses from the surprise, additional tax implemented by Governor Evers’ administration on the relief they took to survive pandemic-related shutdowns,” Bott said. “These businesses used the Paycheck Protection Program to help keep our fellow citizens employed – we should not punish them with a nearly half billion dollar tax. Now that the Legislature has taken swift action to help our economy, we urge Governor Evers to sign this much-needed relief into law as soon as possible.”

The votes by the legislature were also praised by Wisconsin Manufacturers and Commerce (WMC).

“WMC and our members thank the Assembly and Senate for passing Assembly Bill 2 with bipartisan support,” said Cory Fish, General Counsel and Director of Tax for WMC. “Congress intended for PPP loans to be tax-free and for the expenses paid for with the loans to be deductible – this legislation keeps that promise. We strongly urge Gov. Evers to protect small businesses across our state from these surprise taxes and sign this bill into law.”