Lawmakers consider tax incentives to promote employee ownership and safe gun storage

Yahoo

16-04-2025

Wisconsin State Capitol (Wisconsin Examiner photo)
Wisconsin lawmakers considered new tax incentives meant to encourage the development of more employee-owned businesses and cooperatives and to promote safe gun storage. Both measures drew bipartisan support during a hearing Tuesday in the Assembly Way and Means Committee.
One bill — AB 17 — would provide a tax credit to businesses that make the transition to a model that gives employees a stake. The credit would cover 70% of the costs for converting a business to a worker-owned cooperative or 50% of the costs for converting the business to an employee stock ownership plan. Businesses could receive a maximum of $100,000 from the tax credit.
In a worker-owned cooperative, employees jointly own the business and have control over its operations. Employee stock ownership plans give employees partial or full ownership of a company's stock as an investment for their retirement.
According to the UW Center for Cooperatives, there are 728 cooperatives across the state, including 33 worker-owned cooperatives.
The bill would create an individual income tax subtraction and a corporate income and franchise tax deduction for the capital gain realized from the conversion. It would also instruct the Department of Revenue to create a program to promote employee-owned and cooperative business structures, providing education, outreach, technical assistance and training.
'More than ever, Wisconsin benefits from companies keeping jobs here, investing in their communities and staying locally owned,' bill coauthor Sen. Jesse James (R-Thorp) told lawmakers on the committee. This type of business structure, he said, is a 'strong tool' to encourage that goal.
James said the tax incentive would help businesses considering switching because the conversion process can be complicated and expensive.
According to the National Center for Employee Ownership, a transition to a worker-owned model can initially cost between $10,000 and $30,000. Converting to an employee stock ownership plan can generally cost between $100,000 and $300,000, with ongoing costs of $20,000 to $30,000 a year.
Several Wisconsinites who have benefited from making the switch testified in favor of the bill.
John Dally, a veterinarian, said it would provide 'critical support' for cooperatives in Wisconsin. Dally started a practice about 20 years ago with a colleague in Spring Green, and in 2020, they acquired another location in Mazomanie.
As they were getting older, he said, they began considering retirement and the future for their business, Cooperative Veterinary Care.
'We wanted to ensure the practice would stay in these small communities, continue to serve the families and the pets that we just come to know and love — we've worked with them for our entire careers — and we also wanted to have some fair and equitable options for our employees and have a return on our investment to sell,' Dally said.
Dally said historically veterinary practices would be sold to younger associates, but with increasing costs of education, many young veterinarians cannot take on the additional debt that comes with taking it over. Private equity firms and large corporations have also been acquiring small practices in recent years, he said.
According to Brakke Consulting, a veterinary management consulting firm, nearly 25% of general veterinary practices and 75% of specialty practices, such as emergency and surgery care, are owned by large corporations. The issue of consolidation in the pet care field by large corporations has gotten the attention of U.S. Sens. Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut.
'We were looking around and thinking, what could we do, and I came upon this idea of employee ownership and it just made total sense,' Dally said. He said the transition in 2022 to a worker-owned cooperative cost about $30,000. He said a grant helped with the expense, and they also received support from the UW Center for Cooperatives.
Dally said that their team of veterinarians, technicians and assistants have been able to take ownership of the business. The employees, he said, range in age from 20 to 58 and come from a variety of backgrounds.
'We all came together to create bylaws, manage the business, make decisions about how to allocate resources in smart and equitable ways,' Dally said. He said the cooperative has kept these veterinary services in these communities when they might have closed as they retired or sold to a large corporation who may or may not have kept them there.
In the three years since transitioning, Dally said the worker cooperative has developed a beneficial health insurance program and a mental health program, invested in new equipment, raised wages and distributed additional profits back to the employees.
'It's just created a tangible, positive impact on our local communities. It provides a clear pathway for employees to not only work for the business, but to own a piece of it and benefit from its success and all their efforts and enthusiasm,' Dally said. 'Our experience in transitioning to this model is proof that it works, particularly in small communities.'
Dally said it would not have been possible without the help they received, and the bill could provide the necessary support to other businesses looking to make the transition.
'It will allow businesses like ours to thrive and continue serving their communities while providing meaningful economic benefits for workers. It has the potential to change the landscape of business ownerships in Wisconsin, especially in these rural communities that are often overlooked by larger corporate interests,' Dally said. 'We need your support to make this a reality.'
Kristin Forde with the UW Center for Cooperatives told lawmakers that the center's staff has seen greater interest in employee ownership as a succession strategy for retiring owners, but the models remain largely unknown among business owners.
Forde said the state is likely to face a crisis in business as Baby Boomers prepare to retire.
'We really see employee ownership as… a solution to that problem,' Forde said. The legislation, she said, would tie together education and financial incentives to ensure that employee-owned cooperatives are a 'feasible solution to retaining jobs and services in our communities.'
Republicans and Democrats also appeared supportive of AB 10, which would eliminate sales taxes on devices meant to ensure safe storage of guns.
According to the CDC, unintentional injury is a top cause of death among children with guns being a leading method for injury. 'It was kind of jarring to hear that,' bill coauthor Rep. Adam Neylon (R-Pewaukee) said.
Neylon said unsecured firearms are a major cause for those deaths and injuries, and that he wanted to propose a way to make safe storage more affordable.
'This isn't about politics,' Neylon said. 'This is about saving kids' lives.'
Neylon said after hearing from constituents and consulting with the state Department of Revenue, he has amended the bill to cover a variety of devices in addition to gun safes.
The amendment defines a 'firearm storage device' as a locked and fully enclosed container and excludes glass-faced display cabinets. It adds 'firearm safety' devices, 'installed on a firearm designed to prevent unauthorized access to the firearm or to prevent it from being operated without first deactivating the device.'
Rep. Joan Fitzgerald (D-Fort Atkinson) said she supports the action, but called for more to be done.
'Protecting our kids and our communities should be top of mind for many of us… and there are a lot of people that are not responsible gun owners, so I do think we need to do more in this area,' Fitzgerald said.
Gov. Tony Evers has also included the proposal in his 2025-27 budget, but Republican leaders on the Joint Finance Committee have removed it from his previous budget proposals and have said they plan to write their own budget. Fitzgerald asked Neylon why he proposed the measure if it was included in Evers' budget.
'I think, personally, this is at risk of being pulled out of the budget as a public policy item,' Neylon said. While his bill does have a fiscal impact, 'I think there's precedent of doing this through legislation in the past,' he added. 'But if it ultimately is in a budget that I support, I would be happy about that.'
Lawmakers also considered AB 64, which would allow teachers to claim a tax deduction of up to $300 for expenses, including professional development courses, books and other classroom supplies. It, too, has bipartisan support.
Bill coauthors Sen. Dan Feyen (R-Fond du Lac) and Rep. David Armstrong (R-Rice Lake said) the bill mirrors the deduction that is already available for teachers when they file their federal taxes.
'This would double the potential benefit and bring teachers significantly closer to be made whole,' Armstrong said.
Armstrong noted that teachers 'sometimes find it necessary to purchase books or supplies for their classrooms.' He added that he has two daughters who are teachers and remind him about the costs 'consistently at the beginning of school.'
CESA 6 CEO Ted Neitzke told lawmakers his wife, a Sheboygan middle school language arts teacher, has a classroom with likely 'tens of thousands of dollars worth of Mrs. Neitzke's investments in books and materials.'
'This is something that… would be a great tool for local school systems, especially when we're competing nationally for talent, to be able to support our staff in reimbursing some costs that they spend,' Neitzke said. 'Any little bit helps.'
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