The share of Wisconsin taxes generated by corporate income tax
dropped by over 50% between 1979 and 2002 from 11.3% to 5%. (Michigan
currently receives 9.4% of state revenues from corporate income
tax). Over the same period, the share of income taxes paid by
working families grew from 47.4% to 54.4% . When local taxes are
included, corporate income tax drops to 3.9% of total revenue.
If corporations paid the same percentage in 2002 as they did in
1979, the state would have received an additional $600 million
in revenue… A review of state records in 2000 showed that
11 of the 15 largest banks ( including M&I bank in Milwaukee)
paid no corporate income tax. The trend continues in 2001.
(Mike Ivey, The Capital Times, May 14,
2003)
Department of Revenue: In the business year ending June 30, 2002,
almost 2/3 of Wisconsin businesses subject to tax reported no
income and paid no corporate income tax… In addition, 62%
of businesses pass income and expenses to shareholders. They then
report company profits as personal income, which is taxed at a
lower rate.
(JR Ross, AP, September 15, 2003)
b. Assistance for the Affluent
Personal income tax rates have also become less progressive. The
tax rates for the highest income households in Wisconsin dropped
from 10.8 in 1977 to 6.75 in 2002. Wisconsin tax rates now range
from 4.6% on the lowest incomes starting at $8,430 and peak at 6.75%
for the highest.
How has this been possible? Using skillful spin, the right has
strengthened the psychic link between the taxes that affect corporations
and affluent households and the taxes that affect typical families.
The estate tax has become the death tax. The capital gains tax is
linked to home sales profits. Leveling income tax rates to save
millions for billionaires is packaged as the "simple and fair"
flat tax.
The outcome of this campaign has been a steady decrease in effective
tax rates for corporations, investors, and wealthy Americans with
a parallel increase in the percent of taxes paid by middle-income
families.
In Wisconsin in 2002, the richest one percent of taxpayers
paid 8.1% of their income in state and local taxes, the least
by far of any income group, and only 5.9% after deducting
from their federal taxes. By contrast, the poorest 20 percent
of taxpayers paid 10.2% in state and local taxes in 2002,
and middle-income taxpayers paid the most, 11.9%. The
poorest 20 percent gain nothing from federal offset; the middle
quintile gains 0.6%, lowering their final tax liability to
11.3%.
The new data on tax levels come from a comprehensive study
conducted by the Institute
on Taxation and Economic Policy in Washington, D.C., "Who
Pays? A Distributional Analysis of the Tax Systems in All
50 States." |
B. PROPERTY TAX CUTS FOR BUSINESS
Over the past 30 years, residential property taxes have increased
over 10% as a contribution to overall property tax revenue while
manufacturing property taxes have dropped by over 9% through state
legislation.
1999-2000—Authorized $9.5 billion in property tax relief.
1997-1999—Property tax exemption for computer equipment owned
by businesses (effective January 1, 1999).
1995-1997—Authorized $1.3 billion property tax relief. Phase-in
property tax exemption on manufacturers' inventories. Property tax
exemption on machinery and equipment used in manufacturing.
1971-1973—Property taxes reduced through revenue sharing.
C. SALES TAX ON BUSINESS AND LUXURY SERVICES
EXEMPTED
Wisconsin sales tax is imposed unevenly:
Wisconsin imposes a 5% general sales and use tax on gross receipts
from the sale and rental of certain goods and services. The sales
tax on goods is "general," meaning that items that are
not to be taxed have to specifically be listed in state statutes
as exempt. Our sales tax on services, on the other hand, is "selective,"
meaning that if a service is to be taxed, it must be written into
the law as being taxed. There is a long list of goods and services
to which the sales tax does not apply.
There are two ways revenue could be increased by altering our
sales tax: (1) raising the sales tax rate, and (2) applying the
tax to currently exempt items. The Legislative Fiscal Bureau has
estimated the following revenue gains from increasing the state-levied
sales tax rate on the items currently taxed.
| Option |
Increase in revenues ('02-'03, in
millions) |
| 5.5% |
$383.0 |
| 6.0% |
$766.0 |
Source: Legislative Fiscal
Bureau
The second option appears to be garnering increased support.
The Wisconsin Counties Association's "Fiscal Fairness Plan"
included a proposal to apply the sales tax to all but a few items—food,
prescription drugs and a few others—and to simultaneously
lower the overall rate from 5.0% to 3.5% the first year and then
to 3.0% after that. They estimated that such a change would have
increased revenues by $745 million in fiscal year 2003.
(Center on Wisconsin Strategy, Tax Fact Sheets,
2003)
IWF is working to increase tax fairness through several efforts:
-
Publicizing tax inequities in conjunction with other organizations
to counteract the conservative fabrication that tax cuts—enacted
and proposed—benefit all Wisconsin residents.
-
Working to reduce property taxes by finding alternate funding
sources for
education.
-
Increasing public awareness of the sales tax exemptions for
business and luxury services and linking the revenue loss from
these exemptions to education staff and program cuts due to
revenue shortfalls.
|
