Will State Apply Sales Tax to Services?

With the State of Wisconsin facing an unprecedented budget deficit there is legislative talk of removing the sales tax exemption for services.

Under current law the general rule is that only "tangible personal property" is subject to the sales tax. In other words anything you can buy that you can touch is subject to the tax and things like services are exempt. Of course there are many nuances to the law which make compliance difficult, but it is clear that the State leaves plenty of money on the table by not taxing things like legal and accounting services.

So will services be taxed in the future? I think they will even though plenty of lobbyists are against it. If I've observed one thing in life it is that politicians love to spend money and it's rare that they leave money on the table. The fact that the exemption for services exists is something that surely bothers plenty of legislators. The fact that this can be spun as a "leveling" of the playing field and a tax that will imposed on people like attorneys this will surely get some traction. It is also important to remember that taxpayers seem to have no problem with higher sales taxes. In the past election, the County of Milwaukee voted to TRIPLE its county sales tax.

Yes, we will see some opposition from the lobbyists, but I just don't see a great groundswell of public opposition to a change in the law like this. Assuming they will keep most groceries, prescriptions and medical services exempt from the tax I believe that other services will start to be subject to the sales tax.