National Tax Foundation Prescribes Poison Pill for Wisconsin
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The Tax Foundation recommends eliminating tax credits for business research and cuts in technical education. Good advice or economic disaster? |
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.
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.