State Sees 43% Drop in Tax Collections Vs. 2019

It’s about to get real for government. Evers’ pretend 5% reduction ain’t gonna cut it.

Tax collections in the month of April, 2020, were $1,145 million. This is $870 million below collections of April, 2019. And, for the 10 months of the current fiscal year, collections are $313 million below those over the same 10 months of 2018-19.

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1203, 06 May 2020

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Economy | Politics - Wisconsin

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7 Comments

steveegg on May 6, 2020 at 4:47 pm

The big unanswered question is how much of the drop is attributable to the extension of the income tax (mandated by the IRS) and franchise tax (an Evers special) deadlines to July. A key point is that, even though most of that cash won’t actually hit until FY2021, it will all still count toward FY2020.

A partial answer is reflected in the 9.9% drop in sales tax revenues for April, reflecting March sales, caused by Evers’ shutdown, even though most online sales are now taxed. That reflects less than half a month of the shutdown, and was enough to drag the fiscal year-to-date increase down to 3.5%.

Speaking of that taxation of online sales, if the state Supreme Court doesn’t invalidate the Maggie Gau/Andrea Palm extension of the shutdown, it may well cause them to allow physical stores to open back up if only to prevent a further cut in income taxes. I love it when a plan comes together.
Owen on May 6, 2020 at 5:01 pm

The shift to online retail is a hit to the budget. Remember that when the court ruled that Wisconsin had to tax internet sales, the legislature passed a law that said that any sales tax revenue collected for online sales would be offset by a decrease in income taxes. The goal was to make sure that taxing internet sales would not result in a net tax increase to Wisconsinites. So as Evers shut down local retail stores, people are buying more online. Wisconsin is collecting those sales taxes, but will have to offset it with the income tax.
Owen on May 6, 2020 at 5:05 pm

Under 2019 Act 10, individual income tax rates will be reduced to offset the increased sales and use tax collections attributable to remote sellers and marketplace providers. For tax year 2020 and taxable years thereafter, the tax rate reduction is based on the sales and use tax collected from remote sellers and marketplace providers during the 12-month period from October 1, 2019, to September 30, 2020. To the extent that the coronavirus pandemic results in increased taxable sales made by remote sellers and marketplace providers that would have otherwise been in-person taxable sales at physical stores located in Wisconsin, the sales tax revenue used to offset individual income tax rate reductions for tax year 2020 will have a larger fiscal effect than the $119 million income tax reduction estimated under Act 10.
dad29 on May 6, 2020 at 6:46 pm

Don’t celebrate the plan just yet, Steve. Trump’s going to drop $1Bn or so into Tony’s pocket and it’s likely it will be ‘no strings.’ So school spending will go up, even if there are no kids in school first semester ’20/’21.

Think Tony will make the hospitals, docs, and nurses whole? Taking bets?
steveegg on May 6, 2020 at 6:54 pm

Tony Evers’ (WEAC-WEAC) list of groups in order of importance:

1. WEAC
2. WEAC
3. AFSCME
Kevin Scheunemann on May 6, 2020 at 8:50 pm

Awful liberal leadership wrecking prosperity.
dad29 on May 7, 2020 at 11:10 am

Steve, you forgot Planned Barrenhood. Abortion is one of Tony’s sacraments.