RD 0 all: 1 Legislative Fiscal Bureau One East Main, Suite 301 - Madison, WI 53703 - (608) 266-3 847 Fax: (608) 267-6873 Email: 1- Website: February 8, 2019 TO: Representative John ygren Room 308 East, State Capitol FROM: Rick Olin, Fiscal Analyst SUBJECT: Estimated Manufacturing and Agriculture Tax Credit for Selected Types of Industries At your request, this memorandum provides the estimated 2018?19 fiscal effect of manufacturing and agriculture credits claimed by certain types of manufacturing industries. The manufacturing and agriculture tax credit (MAC) may be claimed under the individual income and corporate income/franchise taxes, and the credit is generally equal to 7.5% of the claimant's eligible quali?ed production activities income derived from Wisconsin property that is assessed as manufacturing or agricultural under the state's general property tax. In 2018-19, total MAC claims are estimated to reduce state tax revenues by $291.4 million, including $276.0 million claimed by manufacturers. Specifically, you asked for the estimated revenue reduction due to claims by Wisconsin manufacturers whose finished products utilize agricultural inputs. While many manufacturers use agricultural inputs, the following table focuses on three industry types where agricultural products are the primary input. Because most taxpayers do not identify their business type when claiming the MAC, the following allocations use factors reported in the 2016 Annual Survey of Manufactures, US. Census Bureau. The Survey does not include data on business pro?ts, which would be the preferred allocation method, so data on value of shipments and value added were used for the following allocations: Estimated Fiscal Effect of the MAC in 2018-19 for Certain Manufacturers in Millions) Manufacturing Estimated Revenue of Manufacturing Classi?cation Reduction MAC Claims Food Manufacturing $623 22.6% Beverage and Tobacco Product Manufacturing 3.6 1.3 Basic Chemical Manufacturing 3.9 1.4 Subtotal for Three Classi?cations $69.8 25 3% Total for All Manufacturers $276.0 100.0% If you have any questions on this information, please let me know. RO/lb Page 2