FILE - Wisconsin state Capitol in Madison

A man walks by the Wisconsin state Capitol in Madison.

(The Center Square) – There’s broad agreement to keep Paycheck Protection Program loans for businesses in Wisconsin tax free.

Republican and Democrats in the State Assembly on Tuesday agreed to make sure that minority owned businesses in the state are covered in the tax-free proposal as well, and that opened the door to an overwhelmingly bipartisan 87-3 vote.

“These businesses hung-on,” Rep. John Jagler, R-Watertown said during the debate. “They were able to keep their employees because of the loans they received. They should not be punished for it.”

Rep. Ron Tusler, R-Harrison said businesses, both big and small in Wisconsin, have been through enough. They don’t need another headache from state government.

"In 2020, our businesses endured a lifetime of woes. Unless they were on Gov. Ever's arbitrary essential list, they were forced to close for months,” Tusler told The Center Square. “The idea that we would tax federal help to these damaged businesses is a mistake. Our businesses deserved federal help. We must allow them to keep the help that was offered."

Gov. Tony Evers last month quietly announced plans to tax businesses who accepted a PPP loan, even though Congress intended those loans to be tax free.

Lawmakers on Tuesday said they simply are trying to make sure Congress’ will is carried-out in Wisconsin. The legislation that approved guarantees that expenses paid for with PPP money will be deductible on a business’ state tax return.

“The vote is easy for me because I know that some of these businesses that got these loans profited during the pandemic because of the changes they made to help their workers out,” Rep. Don Vrunick, D-Milton, said.

The governor’s proposed tax increase would have meant nearly $430 million in new taxes on business owners. The state’s largest business group, Wisconsin Manufacturers & Commerce, said many small businesses cannot afford that kind of a tax hit after a year of coronavirus lockdowns and restrictions.

“In the face of COVID-19, these funds were critical to thousands of employers and their employees. Unfortunately, as many businesses continue to struggle, they could now face a hefty and surprising tax bill,” WMC’s Cory Fish said last week.

The legislation immediately heads to the Wisconsin Senate, it’s expected to pass there. It would then go to Gov. Evers’ desk, where its fate is far less certain.