Sure The Citizens Don’t Want It, But Let’s Raise Taxes Anyway

First this.

As the economy tanks, Wisconsin residents overwhelmingly oppose raising taxes on businesses, according to a poll released Friday by the Wisconsin Policy Research Institute.

The telephone poll of 600 residents, conducted the second week in November, showed that 73% of the respondents opposed tax increases for businesses while 19% favored them.

But who cares, right? 

Staring at a multibillion-dollar deficit, some elected officials are asking whether all exemptions from the 5% sales tax are justified - exemptions that include legal services, veterinary care for pets, health club memberships and cloth-diaper businesses.

A state Department of Revenue report says sales tax exemptions total more than $3.7 billion annually - or close to the $4 billion the sales tax is expected to bring in this year. Because of the sagging economy, sales tax collections are expected to drop this year for what may be the first time in Wisconsin history.

No one wants to end the most popular tax breaks - on food and beverages, saving consumers an estimated $550 million a year; on services from health care professionals, valued at $495 million; or on prescription drugs and medicines, saving an estimated $116 million.

But legislators such as Sen. Bob Jauch (D-Poplar) say it’s time to reconsider some of the tax breaks that don’t make life-or-death differences at a time Gov. Jim Doyle says the two-year deficit is $5.4 billion..

That’s a tax increase folks.  Coming soon to a state near you.

1. Bend over, Grab ankles.

   Posted by on November 29, 2008 at 2214 hrs




2. I don’t care if we have a budget deficit or not, I’m no fan of these rediculous tax exemptions for certain industries (except I can understand for food and medicine). For everything else, though, they should be taxed fair-and-square, just like every other company selling things in the state. Regardless of the deficit, the best solution would be to eliminate these special tax breaks and then comprehensively lower tax rates on all sales by the difference. But, if the budget deficit can be balanced partially by this method, it seems like a legitimate, obvious solution. Balance it half by spending cuts and half by eliminating these tax exemptions for firms that employee the best/most lobbyists.

   Posted by on November 29, 2008 at 2307 hrs




3. WPRI forgot to include that fact that the great majority of businesses already don’t pay taxes.  They also forgot to mention that has business taxes have dropped over the years, their property taxes go up.

   Why is WPRI in favor of raising the individual’s property tax?

   Posted by capper on November 30, 2008 at 0103 hrs




4. In the end, no business pays taxes.  It becomes part of the cost of goods and seervices, but I don’t expect capper to get that part.  So, either the business raises prices (another “tax” on the consumer), eats the cost, so someone else gets less - like the employees or the corporate infrastructure - or, as at worst, the company folds its tent and leaves town or goes pout of business.

   I’m pretty sure WPRI doesn’t want anyones’ taxes to go up.  This state has a ridiculously bloated bureaucracy and a pension scheme at every level that is completely and totally unsustainable.

   I hear the new state motto will be, Wisconsin, It’s the New Michigan.  (Milwaukee will be the new Detroit)

   Posted by Steve on November 30, 2008 at 0522 hrs




5. Great idea Mike Pesko.  Let’s raise the confiscation of Business income so much higher than Minn, Ill, Ind, Iowa so that the businesses will leave, jobs will leave.  So then with the businesses gone and the jobs gone (that means Income, OK?) where will your beloved tax revenue come from then?

   Posted by on November 30, 2008 at 0539 hrs




6. Hawkman:  You may recall from an earlier subject that all high tech jobs come from the UW system.  At least, wally thinks so.

   http://www.bootsandsabers.com/index.php/weblog/permalin k/citing_economy_uw_cuts_raises_in_half/

   The continuing steaming pile that sends business elsewhere.

   Posted by Steve on November 30, 2008 at 0601 hrs




7. Will we ever have a leader in Wisconsin who will put forth a plan to bring business here?

   The electorate keeps putting tax and spenders in office so obviously they don’t care as much as we do about spending disipline and tax increase control.

   There are ways to bring business to Wisconsin. Calling ourselves “The Fresh Coast” isn’t one of them.

   Posted by on November 30, 2008 at 0916 hrs




8. Steve, we’re talking about a sales tax, which is a tax that any consumers pay to businesses whether the business creates the product in the state or out of state. So, by dropping sales tax exemptions for special industries, it really doesn’t give them any incentive to relocate (they would still pay the sales tax if they made their product in any of the other states you listed or if they made the product in Wisconsin). You might be able to argue from an Economic standpoint that dropping the sales tax could cause an industry to go out of business if demand for their good falls from the slightly higher price, but in reality I don’t think demand is going to be affected much for, say, bull seman or gym memberships, if there is the regular sales tax added to it that consumers pay. If the website and Republicans want to argue that dropping these exemptions are bad for consumers, that seems like a reasonable Economics arguement, but it’s inaccurate to believe that businesses will relocate by eliminating these special incentives. Instead, I think that Republicans and this website should get on the “reform-government” side of the coin on this issue and say, “hey, it’s ridiculous that these special industries that have hired the best/most lobbyists get these exemptions whereas the majority of hard-working businesses pay the regular sales tax to cover the exempted’s butts.” Like I said in my first post, in a perfect world these special exemptions would be eliminated and sales taxes would be moved slightly downward for all industries to match the previous level of government revenue. However, if a government deficit needs to be filled, it seems reasonable that this be one solution to the problem, as well as cutting costs.

   Posted by on November 30, 2008 at 1107 hrs




9. Steve above in post #4 has it right.  We have a bloated State and local government bureacracy and pension scheme that is completely unsustainable for a State of this size.  As industry and manufacturing race to the Southern US along with China and Mexico the last 25-years taking our tax and job base with it, our leaders keep spending at even greater rates.  Maybe the last one out can impose a nesting tax on those Bald Eagles to pay for the Milwaukee County pensions. 

   By the way, I don’t want to blame just Doyle.  Our congressmen in the House and our Senators (Proxmire, Nelson, Kasten, Feingold, Kohl) have been completely ineffective in getting federal dollars here the last 40-years.  The fact that one of our only military bases of note (the 440th) gets shut down and shipped out is but a symptom of the bigger problem.

   Posted by on November 30, 2008 at 1115 hrs




10. Mike Pesko has it wrong.  Purveyors of goods pass the sales tax on to consumers right now.  Purveyors of services do not (generally speaking).  Service businesses will go someplace where their services are not taxed or they will go out of business.  I speak from experience when I say may service-related businesses are already living on the edge.  Another tasx will kill them.

    Posted by Steve on November 30, 2008 at 1152 hrs




11. It would be interesting to find a list of all service businesses that are receiving exemptions, but the only one I was able to find earlier was legal services. It’s hard to argue that the customers of lawyers should not have to pay a sales tax.

    Many, rather most, services cannot be relocated. For example, people are always going to need their houses cleaned or their cars repaired, and those kind of services cannot be outsourced, they need to stay close to customers. Maybe some consulting, telemarking, etc. can be outsourced to another state, but as far as I know they are not getting their taxes exempted anyways, so would see no change in their taxes that could give them an incentive to relocate.

    Does anybody know where to find a list of all businesses exempted by the Wisconsin sales tax?

    Posted by on November 30, 2008 at 1216 hrs




12. Mike,

    Here’s a link to the Legislative Fiscal Bureau informational paper on the sales and use tax:

    http://www.legis.state.wi.us/lfb/Informationalpapers/6.pdf

    The list of exemptions is on the last three pages.

    Posted by on November 30, 2008 at 1236 hrs




13. Unsustainable. That is the key word in this thread.

    Nobody wanted to apply the word unsustainable to subprime mortgage lending until it was ex post facto obvious.

    Posted by on November 30, 2008 at 1256 hrs




14. The sales tax should either apply to EVERYTHING or NOTHING at all.

    in my mind that is the bottom line.

    After all the Democrats are all about “fairness” right?

    Posted by on November 30, 2008 at 1307 hrs




15. And I will take my previous comment one step further.

    Make Government entities subject to taxes also. (I honestly do not if there is a specific law somewhere mandating that Gov’t agencies are exempt or if that is just tradition perhaps someone could answer that for me?)

    But with the hundreds of millions of dollars a city like Milwaukee spends in any given year, just think about how much money taxing government, could bring into the coffers.

    Posted by on November 30, 2008 at 1317 hrs




16. Generally, all “service” businesses are not required to collect and forward Wisconsin sales-tax.  That includes (e.g.,) computer consulting, accounting, legal, and personnel (temporary and permanent placement.)

    In addition, a number of consumer-oriented service businesses do not collect/forward sales tax, such as barbers and beauty parlors.

    Adding sales tax to accounting, legal (etc.) fees merely jacks up the cost of doing business in Wisconsin. both for the provider AND the recipient of the services.  This will make those service businesses less competitive than out-State rivals who can bill out without a sales-tax addition, but in any case, the entity that pays the tax WILL pass on the cost to its own customers.

    I have yet to see Doylie propose serious cuts to Wisconsin’s expenditures.  He talks a lot about “10% cuts,” but those do not appear to be cuts from the current biennium’s spending levels--rather, they seem to be “cuts” from what the State’s agencies would LIKE to spend in the next biennium.

    IOW, it’s the same old same old.  Run a deficit, tax more.

    Posted by dad29 on November 30, 2008 at 1709 hrs




17. I’m a big believer in eliminating exemptions and reducing the overall sales tax rate so that the change is revenue neutral.  Most of these exemptions (save for perhaps food and prescription drugs) serve no legitimate public interest.  One look at the list of exemptions provided in the link at #12 should convince every rational person that most exemptions are nothing other than the product of lobbyists and their campaign contributions.  Bull semen?  Maple syrup production equipment?  Railroad cars?  Clay pigeons?

    Wisconsin should also move to join the streamlined sales tax project.  Like it or not, every time someone buys something on the internet and fails to pay sales/use tax on their income tax form, they’re breaking the law.  Those internet sales are also putting bricks-and-mortar Wisconsin businesses in a losing position, as those businesses are required by law to collect the tax that online buyers are illegally evading.

    The State of Wisconsin is losing between $150-300 million annually because of tax evasion by online purchasers.  And that’s exactly what it is - tax evasion.  By making it easier for online retailers to collect, we aren’t raising taxes but rather maximizing an existing revenue stream simply through better enforcement of existing law.

    Again, I would prefer to offset any gains by a decrease in the sales tax rate.  But finding ways to enforce existing law better is always preferable, in my mind, to creating new taxes.  Make the system simple, and eliminate exemptions to encourage fairness and make it easier for retailers to collect what it owed.

    Posted by Recess Supervisor on November 30, 2008 at 1745 hrs




18. Our problem is the compensation for public employees, that is where most of the money goes.
    Why should public employees get better salaries, pensions, bennies, sick pay and health benfits plus vacations much better than we, their employers, ge?

    Posted by on November 30, 2008 at 2026 hrs




19. Bob, the only way you could find $2.5 billion annually in employee costs is if you laid off damn near every state employee.  You want to tell people that the majority of tax dollars are spent on employee costs?  You’re full of crap, unless you think you can run an entire state government with 13 people sitting around Tom Reynolds’ plywood kitchen table.

    There are lots of little problems with the state budget.  The “waste, fraud, and abuse” boogeyman is one of them.  So are employee salaries.  Should they be addressed?  Sure.  Solving them produces important savings, but modest savings at best.

    You can’t find $5 billion in cuts without going after program spending.  Roughly one-quarter of the entire budget gets blown on MA and K-12 spending, two areas where spending growth has been virtually unrestrained.  I’ve got a bridge to sell anyone who thinks they can eliminate our structural deficit without raising taxes and without touching those two programs.

    Oh, and also, if your benefits suck so hard Bob, maybe you need to find a better employer?  I get ten weeks of vacation every summer, pay $25 a month for my health insurance, get a pension contribution and a 403(b) contribution from my employer, and I make more than most state employees.  My life in the private sector is just fine, thanks.

    There are a lot of private sector employers who still treat employees well.  Let’s not pretend that everyone in the private sector is starving.  They’re not.

    Posted by Recess Supervisor on November 30, 2008 at 2107 hrs




20. The State of Wisconsin is losing between $150-300 million annually because of tax evasion by online purchasers

    Very imprecise language.  ‘The State is not COLLECTING $XX’ is the accurate rendition. 

    If the State were “losing” $XX, that implies that the State had it to lose in the first damn place.  In fact, it is licit for people to avoid taxation; check the IRS code for plenty of ways to do so.

    Personally, I prefer the Boston Tea Party folks to the “tax everything in sight” folks--by a long shot. 

    And you are correct:  the State should cut MA and school-aids, each by 10% from this biennium’s expenditures.  Let the locals decide what to do--IOW, make them accountable for a change.

    Posted by dad29 on November 30, 2008 at 2133 hrs




21. 75% of our education budget in Tosa is salaries.  Our biggest expense in this state buget is salaries.

    Posted by on November 30, 2008 at 2139 hrs




22. Avoidance is legal.  Evasion is not.  Knowingly purchasing goods on which the sales tax is not collected and failing to report and pay that tax on your state income tax form is evasion - which is why DOR can track you down and make you pay it or file charges against you.  Your state income tax guide is quite explicit about this.  The fact is that most of the violations are so small that it’s not worth their time, but collectively it adds up to a significant sum of money.  But I’m all for cutting program costs first - it’s the only way to bring the budget back into any kind of structural balance.

    And Bob, I will eat my left shoe if you can actually provide verification to back that crap up.  40,000 state employees (give or take) at $70K a year in cost (which is way high as an estimate) is $2.8 billion annually.  That’s roughly 10% of the state budget.  But you can keep smoking whatever it is that is smoked around the plywood table in Tom Reynolds’ dining room.  Facts have never meant nearly as much to you as mindless conjecture.

    Posted by Recess Supervisor on November 30, 2008 at 2354 hrs




23. the only way you could find $2.5 billion annually in employee costs is if you laid off damn near every state employee.

    yeah - - those pensions are free.... 

    There is a reason that private companies left defined beneifit plans (pension) and went to defined contribution plans (401k) decades ago. 

    The first solution that must be imposed would be to change from a pension to a 401k for all public employees. 

    The second change should be the elimination of paid for retiree health benefits.

    Tough times call for tough decisions.  We can either let the same problems that have brought down the GM, Ford and Chrysler bring us down… or we can fix it right now.

    Posted by on December 01, 2008 at 0938 hrs




24. Take all of your education, county, city etc and you have quite a bundle plus bennies.

    Posted by on December 01, 2008 at 0942 hrs




25. Make Government entities subject to taxes also. (I honestly do not if there is a specific law somewhere mandating that Gov’t agencies are exempt or if that is just tradition perhaps someone could answer that for me?)

    Can’t be done. The Supreme Court’s 1819 McCullough v. Maryland ruling said the Federal, state, and local governments don’t possess the power to tax each other. It’s the reason municipal bonds can’t be subject to Federal tax

    Posted by on December 01, 2008 at 1236 hrs




26. I’m not saying pensions are free.  But that ship has sailed the harbor.  You can only address that situation going forward, not going back.  The state is on the hook for commitments already made.

    I still find it humorous that there are so many bloated, unnecessary programs in state government and yet the cause that so many still want to latch onto is employee compensation, which is, in the scheme of things, nowhere near the biggest issue facing the State of Wisconsin.  At least it shows where these AssGOP leggies derive their misguided approach from - their misguided constituents.  Guess what?  As much as many of you find it therapeutic, beating up on public employees doesn’t score you any points with voters. 

    There always seems to be this flawed assumption in these discussions that everyone on the state payroll is a lifer.  But many state employees aren’t.  Many who work for the state never become pension-eligible and they’re never able to convert their sick leave to health care.  The state has virtually zero long-term cost associated with them.

    Also, for the record, please note that Dohnal isn’t providing any kind of specific proof to support his claims.  He also now wants to lump every kind of public employee under the sun into a discussion about the state budget.  Local governments are free to make their own determinations about employment practices.

    Posted by Recess Supervisor on December 01, 2008 at 1250 hrs




27. Local governments are free to make their own determinations about employment practices.

    While on the surface I agree with you on this statement, when you dig below the surface - I have issue with one important problem.  The localities have their hand out to the state begging for money. 

    Localities are at the mercy of the state for a majority of their funds.  When you look at MPS, Milw County or even city of Milw - their budgets are so closely tied to what they can squeeze out of the state, they really have no true control.

    Because I don’t know RS - what are some of the big spending programs that could/should be cut?

    Posted by on December 01, 2008 at 1256 hrs




28. I’m not saying pensions are free.  But that ship has sailed the harbor.  You can only address that situation going forward, not going back.  The state is on the hook for commitments already made.

    Yes - lets change that now (should have been done years ago) to help ease that burden for future budgets.  What is the worse that can happen - state employees strike?????

    Posted by on December 01, 2008 at 1301 hrs




29. Recess Supervisor is correct it is not logical to lump all public sector employees in with the state budget problem.  The real issue lies at the feet of the legislature.  Both parties.  They refuse or at least are very resistant to make any real tough budget decision.  Before anyone says that cutting a budget X%(whatever that % is) is difficult I will say that it is not.  The real work and decisons would be if they actually sat down and determined what was legally required to be funded.  That should be their starting point.  Build the budget from there.  I have suggested this to Pat Strachota and Glenn Grothman and received blank stares both times. 

    There is little if any political will to make significant changes to the budget and government.  People are too worried about being re-elected.

    Posted by on December 01, 2008 at 1346 hrs




30. Under our system most local employes are subsidized by the state through school aids, local aids to municipalities and many others.  The state already sets all kinds of guidelines like QEO, yearly increase etc. To start controlling spending you start at your biggest hole, like the auto companies should have done.
    Control employee compensation and the rest will fall into line.
    Once you make a stand, like Reagan did with the air controllers the rest fall into line.
    People are tired of seeing their employees walk away with millions, better bennies than they have, more sick days and early retirements.
    Control the problems and the auto industry and the governments would not have these problems.
    Actuaries have stated that within a genration all tax money wll end up in employee pockets for their various programs and nothing will be left for the taxpayers.
    I love to hear them wihine about their diffuclt lives while the rest of us work our butts off.

    Posted by on December 01, 2008 at 1351 hrs




31. The state of Washington did this years ago.  Made a list of priorites, funded them properly then dropped everthing else.  No one in Wisconsin has the guts to do that, so start with the biggest leaks, close most of those holes than go from there.  Money spent on employees can’t be spent on services.
    Listen to people whine about the smployees, they all want their special treatment and if they can get better in the private sector than don’t let the door hit you in the butt as you leave.
    Public employees have unions, civil service and all kinds of rules.  You cannot fire them for incompetence, just sit them by the window for a decade or so.
    Who needs these special characters?

    Posted by on December 01, 2008 at 1420 hrs




32. Kris is dead-on about zero-based budgeting.  There have been some half-hearted discussions about it in the past but never any serious talk.  It’s a very time-consuming process, but it would be great to do, even if it was just a matter of cycling the agencies through the process every three or four budgets.

    Once again, Dohnal wants to just kick at public employees like a petulant child.  I’m not wasting my breath with it anymore.  I will say only this.  Trashing public employees does nothing to help the GOP win votes.  Average voters simply don’t care, period.  It’s not on their radar when they enter the voting booth, and the insistence of some to beat the dead horse constantly only proves how tone deaf they are.

    Instead of meeting voters where their concerns are, time and again, some conservatives want simply to beat their chests loudly and order voters to care about the things that *they* think are important.  Instead of working to change people’s minds, they simply deride them for disagreeing.

    It’s a big reason why the GOP is trending downward right now.  This was a losing strategy for many Democrats in the last twenty years and it’s not working any better for the GOP now.  But angry white guys like Dohnal just don’t get that.

    Posted by Recess Supervisor on December 01, 2008 at 1545 hrs




33. But angry white guys like Dohnal just don’t get that.

    I am sorry - but what does being ‘white’ have anything to do with it?

    I like #29/31 comments about starting over - fresh slate with funding only what is legally required to fund and public safety (fire/police/prisons) and build from there.  Instead of what we appear to have in ‘last year we spent ‘x’ - this year we are going to spend ‘x’ + 5%

    BUT even with a fresh slate - if the problems that helped lead us to where we are today - pensions and other retiree benefits - are not corrected - it won’t do us any good.  Yes there are other small problems that must be corrected as well - including the funding mechanism/formula for localities and school districts but these are all starting points.

    Posted by on December 01, 2008 at 1553 hrs




34. Please identify—with particularity—what state or local service should no longer be funded.  In other words, tell us exactly what government function or program should be euthanized.

    A lot of people are blowing it out the tailpipe here.  Get specific.

    Posted by on December 01, 2008 at 1930 hrs




35. It is very simple.  Decide what services that the state must do, matchit with funding and cut everything under that.

    Posted by on December 01, 2008 at 2316 hrs




36. Who cares about the GOP winning votes.  Do they just buy them by overloading employees with salaries and bennies like Tom Ament did?
    No this is about getting the best bang for your buck and that means paying people what they deserve not what they get through union threats.

    Posted by on December 01, 2008 at 2321 hrs




37. Wally - see comment #33 (directly above yours) - What should the state be funding other than public safety? (such as state patrol, crime lab, prisons, courts)

    The state really shouldn’t be involved in much more.

    BUT

    The government shouldn’t be the largest employers in the state or county… Currently according to Worknet, a government entity is #1, 2 & 3 in Milw county (with health care #4-6,8-9) Please tell me why the city of milw or county of milw employes more people than Aurora or Northwestern Mutual?  If it were not for Wal-Mart, a government entity would be number one in the state....

    Posted by on December 02, 2008 at 0908 hrs




38. Clint, don’t put the cart before the horse.  Units of government don’t hire a bunch of people and then wait for programs to be created.  Employees are usually hired after the workload has been generated.  The number of employees is driven by the number of programs created by elected officials.  There would be fewer public employees if the public wasn’t so approving of government doing so much for them.

    Posted by Recess Supervisor on December 02, 2008 at 1202 hrs




39. the public wasn’t so approving of government doing so much for them.

    Yes - but I would revise that slightly.  People are approving because they are misled as to the cost of the programs.  It would be nice if we could get straight, real answers on the cost of that government.  Then you would have to wonder how many people would approve of it.  When it is sold to people as “this program will only cost taxpayers $4/month”. 

    I want someone to do my grocery shopping for me.  Just tell me it is free, or like liberals sell universal HC tell me how it will cost less to have the gov’t do my shopping for me.... and how I will get the same groceries…

    I understand that the employees became employees after the programs were created.  If you cut the programs we can cut the employees.  But I also look at how politicians create programs for the sole purpose of having people on the state payroll.

    Posted by on December 02, 2008 at 1211 hrs




40. ‘We should not - we must not - and I will not - raise taxes.’ - Jim Doyle

    Swamp Land and Bridges for Sale. - contact the Wisconsin Governor’s Office.

    Posted by on December 02, 2008 at 1401 hrs




41. I don’t want to give the impression of a comformist person but our voice is never heard and if they say higher taxes, then higher taxes we will pay.

    Posted by Hayabusa Fairings on December 11, 2008 at 1208 hrs