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Job-killing budget bad for Wisconsin’s economy - Spring 2011
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Report shows cuts to public employee compensation damage Wisconsin’s economy - February 2011
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Community officials protect local control of labor contracts - February 2011
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Close property tax loopholes to help communities - January 2011
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Harley-Davidson: No reason to re-open corporate tax loopholes - May 2010
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Closing state’s billion-dollar tax gap would help budget - April 2010
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Note to Tea Party -- the Federal Stimulus gave us tax cuts !!! - April 2010
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IWF Conference Examines Property Tax Exemptions - February 2010
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Federal TARP aid is a success story for Wisconsin’s small banks - January 2010
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Proposed restrictions on billboard taxes bad for communities- January 2010
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National Tax Foundation Prescribes Poison Pill for Wisconsin - October 2009
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Tax day article - April 2009
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IWF seeks moratorium on all tax breaks in the legislative pipeline - March 2009
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IWF Tax Gap estimate confirmed by state - March 2009
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Property taxes are really regressive- February 2009
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Progressive tax reform surges in Wisconsin - February 2009
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All options on the table New report outlines possible sources of additional tax revenue - November 2008
Community officials protect local control of labor contracts
Hundreds of local officials from communities across Wisconsin are opposing Governor Walker’s proposal to restrict collective bargaining with public sector employees. In an open letter to the Governor and Legislator, 327 elected and appointed leaders — from 35 cities, 55 towns, 34 villages, 40 counties and 40 school districts — urged state leaders to delete provisions related to collective bargaining from the Budget Repair Bill now being considered.
On Friday, February 23, 2011, a group of local officials from Eau Claire, La Crosse, Oshkosh, Winnebago County, Middleton and Madison held a press conference in the Capitol to spell out their objections to the Governor’s plan. Madison Mayor Dave Cieslewicz said Wednesday that local officials don’t want the collective bargaining provisions of Walker’s budget repair bill. “Allow us to make decisions locally about how we’re going to deal with this issue,” Cieslewicz said. “Destroying collective bargaining will not help us balance a single budget.”
Numerous governing bodies for municipalities, counties and school districts have passed resolutions against the Governor’s effort to usurp local control over collective bargaining.
Addition news coverage:
Oshkosh Northwestern
Wisconsin State Journal
La Crosse Tribune
WisconsinReporter.com
Wisconsin Radio Network
Report shows cuts to public employee compensation damage Wisconsin’s economy
Cutting household income for state, local and school district public‐sector families, as proposed by Gov. Scott Walker and other political leaders, will cost the state $1 billion in reduced economic activity. The new IWF report, Unintended Consequences: The economic impact of cutting public sector wages and benefits, shows that the proposed cut in public worker compensation would result in the loss of 9,000 private sector jobs and $600 million a year in economic production in the private sector. It would eliminate $42 million in property taxes or shift them to other taxpayers and increase the state unemployment rate. Every county in the state would suffer with reduced economic activity and less local revenue.
To read more about how these proposals are a lose-lose strategy for Wisconsin see the report: Unintended Consequences
See the press release for the report
Gov. Walker promised jobs, but his plan would destroy 10,000 jobs
People in Wisconsin may disagree about many things—but everyone wants more jobs.
Gov. Scott Walker’s plan to slash take-home pay for public workers would destroy about 10,000 jobs in Wisconsin’s private sector. At a time when the state needs good jobs more than anything, it is the wrong economic strategy.
For more details, see IWF's two-page release
Job-killing budget bad for Wisconsin’s economy
20,000 jobs lost by Legislature’s refusal to tax the wealthiest
We all want jobs. But the budget the Legislature is sending the Governor is a job-killing disaster.
The severe cuts in the budget will destroy the equivalent of 18,000 jobs in the first year and 22,000 in its second year, through direct layoffs of public employees and the ripple effects of reduced government spending.
That’s according to a simulation of the impact of the budget on the state economy, using economic modeling software.
“The Legislature’s budget is a job-killing assault on the public structures a prosperous middle class depends on, such as education, health and strong local governments,” said Jack Norman, Research Director for the Institute for Wisconsin’s Future. “Instead of more tax breaks for Wisconsin’s most prosperous individuals and corporations, legislators should have generated revenue from these sources in order to lessen the severe cuts.”
Click here for county-by-county details on cuts expected because of the budget.
IWF has long urged a balanced approach to budget-making, using targeted revenue increases to balance cuts and to ensure that Wisconsin’s wealthiest make sacrifices comparable to those forced on public sector workers.
That’s why IWF joined with dozens of other organizations to create the Wisconsin Values Budget,a job-saving balanced alternative budget.
For details on alternative revenue sources, see:
> Full report Catalog of Tax Reform Options for Wisconsin
> Short version of the Catalog of Tax Options
> Read the Milwaukee Journal Sentinel's op-ed by Jack Norman and Karen Royster
Close property tax loopholes to help communities
Communities face major cuts in 2011 because of the $3 billion state deficit. At a time when local property tax revenue is very crucial to protecting schools, police, firefighters, there are many large entities that pay no property tax at all. Families and small businesses may have to come up with several thousand dollars at holiday time, but wealthy non-profit hospitals, expensive senior housing programs, and others don't contribute a penny. Over the years, the legislature has passed many tax laws that reduce or eliminate responsibility for property taxes. A new study from IWF— Too Many Loopholes —outlines the numerous property tax exemptions that drain revenue from communities and tilt the weight of tax responsibility onto homeowners and small businesses. The report also offers solutions that increase funding for schools, cities and counties while leveling the tax paying field to include major institutions that currently use services but pay nothing.
Read the Report:Too Many Loopholes; How to turn property tax exemptions into revenue for local government
Read the Milwaukee Journal Sentinel article
See the Press Release
Wisconsin Recovers Website
The new Wisconsin Recovers website is officially open to show how the stimulus helped Wisconsin communities. This website is sponsored by Wisconsin Voices and is designed to be clear, easy to use and helpful in finding out how the Recovery Act funding affected you, your family and your county. wisrecovers.org
For more information, contact Jack Norman at IWF -- jnorman@wisconsinsfuture.org
Harley-Davidson: No reason to re-open corporate tax loopholes
The highly-publicized Harley-Davidson situation has nothing to do with state tax policy, despite the efforts of many conservative commentators to link the two.
This is clear from facts about Harley’s taxes contained in a short IWF report, Harley-Davidson: It’s not about state revenue policy.
The issue began when the firm announced it seeks concessions from unions representing 1,400 employees in Menomonee Falls and Tomahawk. Without concessions, the company said it might move headquarters and manufacturing out of Wisconsin, its home since 1903.
Anti-government forces exploited the situation into a forum for attacking last year’s enactment of combined reporting. Combined reporting is a reform of corporate income taxes that closes loopholes large firms had been using to avoid taxes.
That’s because combined reporting will cause a small increase in Harley taxes. But Harley’s state tax had already been slashed almost to zero by an earlier change to corporate income tax, a change that saved the company $14 million in 2008 alone.
Combined reporting ensures tax fairness. When some large corporations eliminate their Wisconsin tax liability, all others pay more to make up the difference. It’s a slanted playing field rewarding big companies willing to use aggressive tax-avoidance tactics.
As the Harley facts show—along with other new data contained in the report—combined reporting does not hinder a state’s ability to attract or retain jobs.
See the IWF report on Harley Davidson
See Jack Norman's op-ed piece in the Milwaukee Journal Sentinel
See the article in the Milwaukee Journal Sentinel.
Closing state’s billion-dollar tax gap would help budget
Wisconsin loses $1.2 billion every year due to the “Tax Gap,” the difference between what is legally owed by taxpayers and what is actually paid. This equals one out of every $10 collected by the state as general purpose revenue. The estimate is in a new IWF report: Wisconsin’s Billion-Dollar Tax Gap—How uncollected taxes can help fill the state’s budget hole.The tax gap is important because the loss of over one billion dollars a year means less state aid to cities, towns, counties and schools. The reduced state aid results in program cuts that raise class size, slow firefighter response time and deliver fewer meals on wheels to the elderly. At the same time, property taxes go up to make up for lost state dollars. It’s a double whammy for responsible citizens and business owners who file their tax returns, pay their taxes and support the services and infrastructure needed for stable and prosperous communities. Who’s not paying taxes? Some of it is people making honest mistakes or being confused by complex tax laws. But a good deal of it is deliberate:
- Individuals, business owners and corporations skipping out on paying income tax;
- Internet buyers and others avoiding sales tax;
- Smokers sneaking around the cigarette tax by going out of state.
What should be done?
State officials need ongoing information on how large the gap is, who is not paying and what mechanisms they are using to sidestep their responsibility. Technology upgrades are needed to improve online taxpayer services, communications and outreach as well as e-filing and the use of electronic databases for audits and collections. The Department of Revenue needs full staffing so it can fulfill its mission.
It’s time to simplify tax laws so they are clear. Wisconsin’s tax structure is too complicated due to the proliferation of new exemptions, deductions and credits which makes tax laws too long, too wordy and too easy to manipulate.
Read the report, Wisconsin’s Billion-Dollar Tax Gap—How uncollected taxes can help fill the state’s budget hole
See the press release
Note to Tea Party -- the Federal Stimulus gave us tax cuts !!!! 
In Wisconsin (and every other state), tax cuts from the federal stimulus have been raining cats and dogs. Thanks to the federal stimulus, Wisconsin individuals, families and businesses are seeing a $5.2 billion tax cut over the 2009-2010 tax periods. Who's getting these tax cuts? EVERYBODY!
Each of Wisconsin’s 2.2 million working families or individuals is receiving a tax cut averaging $506 per year in 2009 and 2010 through the Making Work Pay credit. That’s enough to pay for a month’s worth of groceries, and it amounts to a statewide tax cut worth $2.3 billion. And there are many more tax cuts and direct aid that benefit diverse groups of citizens and companies.
While banks have kept a tight hold on their funds, the federal government has been pumping money into the economy consistently since February 2009 through the stimulus—the American Recovery and Reinvestment Act (ARRA)—to prevent an economic collapse.
This recession has been painful for the people of Wisconsin who have lost jobs, pensions, home values and, sometimes, hope. The federal government has been a constant target of anger and frustration because people want to blame someone, and the bankers who created this catastrophe have faded back into their skyscrapers. However, for those who want government to cut taxes and put money into people’s pockets to jumpstart the economy: Open your eyes. Your wish has already been granted.
See: Milwaukee Journal Sentinel article
IWF Conference Examines Property Tax Exemptions
Who isn’t paying their share of property taxes?
That was the focus of attention for about eighty local officials and other leaders—from over 30 Wisconsin communities—at an all-day conference in Madison, F
ebruary 19, 2010 sponsored by IWF.
The conference was titled Rethinking Ways to Fund Local Government: Exploring Property Tax Exemptions.
Particular attention was paid to large nonprofit health-care systems; real estate speculators who abuse agricultural assessment; billboard owners; and nonprofit housing for affluent seniors.
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| Closing panelist Brad Karger, Marathon Co. Administrator, Mark Harris, Winnebago Co. Executive, and Jessica King, Oshkosh City Council Member discuss where do we go from here. |
Documents from the conference:
Conference agenda
Norman PowerPoint on Health Care facilities
Schlafer PowerPoint on Health Care facilities
Weeth PowerPoint on billboards
Weissenfluh PowerPoint on billboards
Reavey PowerPoint on nonprofit housing
Summary of nonprofit housing session
Dept of Revenue breakout session
National Tax Foundation Prescribes Poison Pill for Wisconsin
If national think tanks could be sued for malpractice, Wisconsin would collect a sizable settlement.
In its recent report, 2010 State Business Tax Climate Index, the Washington, D.C.-based Tax Foundation lays out how Wisconsin could ‘improve’ its tax policies. It recommend taxing groceries, eliminating business development incentives, slashing the state investment in health, education and transportation, and making everyone pay a flat income tax rate.
“It’s a total losing proposition for middle class families, small business, students and senior citizens,” states Jack Norman, Research Director for the Institute for Wisconsin’s Future (IWF).
According to the IWF critique, the Tax Foundation uses cascades of numbers to mask a predictable anti-government rant. The Tax Foundation is governed by a Board that includes campaign advisors from the George W. Bush, Dick Cheney and John McCain campaigns as well as conservatives notable for their work with wealthy individuals and corporations.
Conservative pundits in Wisconsin cheered the report, eager to cite national experts to justify reduced taxes and reduced state investments in essential infrastructure. Given their “just say no” mindset, these conservative pundits have failed to look closely at the policy conclusions embedded in the Tax Foundation report.
At a time when businesses, workers and taxpayers need to gear up for rebuilding the state economy for long-term prosperity, the Tax Foundation report would send the state down river to a Mississippi Delta quality of life. Where are the lawyers when you need them?
Click here for IWF’s critique of the Tax Foundation report.
Federal TARP aid is a success story for Wisconsin’s small banks
Wisconsin’s small, community banks—with a little help from the federal government—have played a valuable role in helping stabilize the state economy during this deep recession, according to a report from the Institute for Wisconsin’s Future.
While some of Wisconsin’s largest banks continue to struggle for survival, its nearly three hundred community banks have increased lending while maintaining fiscal health, according to IWF’s analysis of bank data.
It has been two years since the recession began and one year since the federal bank assistance program—TARP (Troubled Asset Relief Program)—was enacted. Twenty Wisconsin banks received TARP assistance. While the three huge TARP recipients are still struggling (M & I Marshall & Ilsley, Associated, AnchorBank), the 17 small banks that received TARP funds have as a group been Wisconsin’s strongest in terms of increased lending, stable capital, and maintenance of employment. These seventeen banks used the federal TARP funds to increase their lending, boosting small business activity around the state.
Financial giants caused the threat of global financial collapse and the worldwide recession. But small banks don’t deserve to be blamed for the economic disaster. Wisconsin’s smaller banks have helped the state weather the resulting storm.
The resilience of Wisconsin’s small banks and their ability to use TARP funds effectively demonstrate that proactive intervention by government is a critical tool for restoring Wisconsin’s prosperity. Government efforts to direct the flow of money during this economic crisis have been a vital safety net for Wisconsin’s middle class and small businesses.
Hear Jack Norman talk about this issue on WUWM's Lake EffectRead the full IWF TARP report
See the press release
Proposed restrictions on billboard taxes bad for communities
During a time of severe budget crises for local governments, the worst thing the Legislature could do is create even more exemptions from the local property tax, thereby depriving counties, municipalities and schools of vitally needed revenue.
Yet that’s exactly what would happen if legislation is passed to change the way advertising billboards are assessed for property tax purposes.
Assembly Bill 215, now before the Assembly’s Committee on Jobs, the Economy and Small Business would handcuff local government assessors who have been trying to properly assess the taxable value of billboards. AB215 is tailor-made for the billboard industry rather than for the local governments which depend on property tax revenue to fund essential services.
For details, see this IWF press release.
For background, see this article in the Business Journal of Milwaukee.
Tax day article
As anti-government groups gathered to protest taxes on April 15, IWF pointed out the ironic fact that tax costs are down for most Wisconsin residents while vital services continue. 2009 is a good year for most taxpayers.
IWF seeks moratorium on all tax breaks in the legislative pipeline
The Legislature should immediately stop work
on the thirty or more new or expanded tax breaks
already introduced this session.
There are two reasons for halting action on these
proposed tax credits, deductions and exemptions:
1. Given the budget crisis, it makes no sense
to cut state revenue. Some of the proposed tax
breaks may be sensible proposals, but with the
huge cuts proposed in state services, this is
not the time to enact new breaks.
2. The nonstop proliferation of tax breaks over the past twenty years has not only riddled the state tax base with holes, but has led to an enormous increase in the complexity of Wisconsin’s tax code and tax forms.
For details, see:
• IWF working paper: Simplifying Wisconsin Taxes
IWF Tax Gap estimate confirmed
by state
Hearing on “Invest
in Revenue”
set for March 25
Wisconsin’s Department of Revenue has confirmed IWF’s January estimate that the state’s tax gap—the difference between taxes owed and taxes collected—exceeds one billion dollars.
IWF included the estimate in its report, Investing in Revenue: How Wisconsin can profit by using the Minnesota model for closing the tax gap. The report urged the state to invest in the Revenue Department’s capacity to collect taxes, saying as much as $100 million annually could be collected with a modest investment in Revenue resources.
On March 4, 2009, the Milwaukee Journal Sentinel’s Steven Walters reported on Page One that “Unpaid taxes in Wisconsin reach $1 billion.” Walters noted: “The total of delinquent taxes owed state government rose about 27% in a year, going from $800 million to $1.03 billion on July 1, according to Revenue Department figures requested by the Journal Sentinel.”
Walters also reported that “Senate President Fred Risser (D-Madison) plans a March 25 committee hearing on the Revenue Department's tax-collection efforts, including the controversy over whether the agency needs more - and not fewer - workers.” Risser chairs the Senate’s Committee on Ethics Reform and Government Operations.
Property taxes are really regressive
Modest-income homeowners and homeowners over 65 years old are bearing the brunt of Wisconsin’s property tax increases, according to a path-breaking new report on the unpopular tax.
Homeowners in the bottom 40% of income had a property tax burden more than twice that of homeowners in the upper 40%, according to the study by Rebecca Boldt and Bradley Caruth, both of the state’s Department of Revenue, and Andrew Reschovsky of UW-Madison. Tax burden measures the tax as a percentage of income.
The three researchers used pioneering techniques to track property taxes and income for three-quarters of a million Wisconsin homeowners who stayed in the same house between 2000 and 2005. Previous studies of property taxes have almost never been able to connect property taxes to individual homeowners and their incomes.
The study found tremendous variation in property tax burdens, with 41% of homeowners actually seeing a decrease in property taxes, after adjusting for inflation. But falling property taxes were most likely to be seen only by higher-income homeowners.
For lower-income and older homeowners, property tax burdens generally grew during the five-year period. By 2005, the poorest fifth of homeowners paid 6.3% of their total income in property taxes, about three times the ratio paid by the richest fifth, after taking state and federal tax relief programs into account. [see chart]
The authors argue that Wisconsin’s two property tax-credit programs are too small and poorly targeted.
For the full report click here.
Progressive tax reform surges in Wisconsin
It was the best week for tax reform that Wisconsin has seen in a long, long time, the culmination of years of preparatory work.
On Feb. 19, 2009, Gov. Jim Doyle signed into law a budget-repair bill that includes several breakthrough tax reforms, including the adoption of combined reporting for corporate income tax, to close loopholes that allow multi-state corporations to avoid state taxes.
And on Feb. 17, Doyle proposed a budget for the upcoming 2009-’11 biennium that would include additional progressive tax reforms, including two income tax increases for the wealthiest taxpayers, one to increase the top marginal income tax rate and the other to increase capital gains taxes.
The budget-repair bill squeezed through the Legislature with the tightest of margins, including a 50-49 vote in the Assembly that killed the last chance of combined reporting opponents. The legislation included a variety of tax modernization items:
* Combined reporting for corporate income,
to shut the loopholes used by some major corporations
to avoid paying taxes and to create a level playing
field so all firms play by the same rules;
* Bringing Wisconsin into the national Streamlined
Sales Tax project, to hasten the day when sales
tax can be charged on Internet sales;
* Extending the sales tax to a number of digital
products that have avoided taxation;
* Creating a hospital assessment that will bring
hundreds of millions of federal dollars to the
state and increase payment levels for many of
Wisconsin’s hospitals.
The budget proposal for 2009-’11 will be debated in the Legislature over the coming months. Tax reforms in the governor’s proposal include:
• A higher individual income
tax rate for the wealthiest taxpayers in the
state, those earning over $300,000 a year;
• Scaling back the exemption of capital gains
income from 60% to 40%, reducing a benefit that
goes almost entirely to the state’s wealthiest
taxpayers;
• A new assessment on oil companies, to help
fund road repair and building.
Taken together, these structural changes will move Wisconsin’s tax system into the 21st century. The reforms will help create a tax system that is more fair to taxpayers—individual and businesses alike—while increasing support for vital public infrastructure and services.
These revenue policies are major steps forward in the long-term effort to rebuild an adequate funding base so that major public systems, including transportation, education, public safety and community development, are capable of providing a strong foundation for economic growth and recovery.
See IWF’s latest report on combined reporting: Combined Reporting: How Closing Corporate Loopholes Benefits Wisconsin.
Funding-reform plan unveiled
The School Finance Network, a coalition of nine statewide education groups, just released its long-anticipated reform plan around the state. For details on the plan and how to get involved in the campaign to enact it, go to www.sfnwisconsin.org
On January 27, over 40 leaders from Eau Claire and Altoona discussed possible ways to increase state revenue in order to boost state aid for community services and infrastructure. Dr. Jack Norman, IWF Research Director, reviewed a range of ways that Wisconsin could expand its revenue base based on the latest IWF reports on strengthening the Department of Revenue and modernizing tax policy. The groups discussed the options as one step in developing a plan for long-term state fiscal reform.
More state revenue without raising taxes:
Beefing up tax enforcement pays dividends
Wisconsin could generate nearly $100 million a year by increasing tax-enforcement efforts in the Department of Revenue, according to IWF’s newest report: Investing in Revenue: How Wisconsin can profit by using the Minnesota model for closing the tax gap.
A $25 million investment in tax-enforcement resources for the Department of Revenue (DOR) could return $200 million in additional revenue in the coming state budget 2007-’09 biennium, the report argues. That is $175 million that state budget makers would not have to find through spending cuts or tax increases when they address the state’s deficit. It can be part of a multifaceted approach to addressing Wisconsin’s current budget deficit and establishing budget stability in the future.
IWF’s optimism about the benefits of stepped-up tax enforcement is based on results in Minnesota, which has followed that path since 2001 with outstanding results. IWF urges lawmakers to take a close look at Minnesota’s experience, which could be replicated here.
Click here for a copy
of the report.
See
the story in the Milwaukee Journal Sentinel.
All options on the table
New report outlines possible sources of additional
tax revenue
In the wake of reports that Wisconsin’s budget shortfall for the coming biennium could exceed $5 billion — the deepest hole the state has faced in decades — the Institute for Wisconsin’s Future (IWF) and the Wisconsin Council on Children and Families (WCCF) have released an inventory of options for reforming the state’s tax system and finding a balanced approach for filling the deficit.
The Catalog of Tax Reform Options for Wisconsin includes a number of suggestions for bringing additional tax revenue to the state, to help protect essential public structures in a time of economic distress. No specific item is endorsed, but the report stresses that some combination of the recommended measures is necessary for a balanced approach to addressing the looming deficit while preserving vital public services and infrastructure.
Areas covered include changes to the sales tax, personal income taxes, business taxes, transportation taxes, and miscellaneous taxes.
Click here to see the report.
Read WCCF's op-ed in the Capital Times
Read op-ed in Milwaukee Journal Sentinel
Also stories in Wisconsin State Journal (Nov.
29)
and Milwaukee Journal Sentinel (Nov. 28)
Hear Jack Norman on At Issue with Ben Merens