Boots & Sabers

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Tag: Taxes

Eliminate the state income tax

Here is my full column that ran in the Washington County Daily News earlier this week.

In my last column before Christmas in 2013, I climbed back on my old hobby horse to once again advocate for eliminating Wisconsin’s income tax and replacing some of the tax revenue with an increase in the sales tax. Eight years later almost to the day, former Governor Scott Walker is leading the charge with a group of tax reform groups to do exactly that. Armed with a study by Noah Williams at the University of Wisconsin-Madison’s Center for Research on the Wisconsin Economy, Walker and fellow reformers say that it is time for Wisconsin to become the 10th state without a state income tax.

 

Our government extracts money from all of us in myriad ways. Most state governments get the majority of their revenue from the income tax and the sales tax. In Wisconsin, those two taxes account for 84% of general purpose revenue in the state budget with the income tax filling 52% of the state’s general purpose revenue bucket.

 

The model used in Williams’ study shows that state government could maintain the same intake of revenue after eliminating the state income tax if it increases the state sales tax from the current 5% to 9.43%. But the sweet spot for the overall benefit of the state is to increase the state sales tax to 8% after eliminating the income tax. While this would result in a 12.55% decrease in state revenue, thus requiring spending cuts, it would increase economic output by 7.93%, employment by 6.87%, consumption by 7.19%, and, perhaps most importantly, increase average after-tax income by 9.35%.

 

One of the primary reasons cited by the study for eliminating the income tax is to make Wisconsin more competitive with other states. Our society is more mobile than ever — particularly for the middle and upper classes. People weigh a lot of things when deciding where to live, where to work, or where to start a business. Whether or not there is an income tax is one of those important factors. People are voting with their feet as Wisconsin exports people to states like Florida, Texas, and Nevada. Wisconsin already has an uphill battle to attract workers, retirees, and entrepreneurs with brutal winters, high taxes, and a steep regulatory burden. Eliminating the state income tax would encourage people to take a harder look at Wisconsin when deciding where to live, work, and play.

 

Beyond attracting more people to move to and stay in Wisconsin, the sales tax is fairer than the income tax. By its very definition, the income tax is only paid by people who earn an income. It is a tax on earning a living that the idle rich, the idle poor, and the intentionally unemployed do not have to pay. It is a tax that only those people who jump out of bed every day to go to work have to pay to support state government.

 

The sales tax, on the other hand, is paid by anyone who spends money on goods and services. It is paid by the rich lady who buys her fourth home, the middle-class family buying a used car, and the unemployed twenty-something buying beer for the weekend. Everyone pays, which spreads the tax burden more equitably across all Wisconsinites.

 

Furthermore, it is much more difficult for politicians to manipulate the sales tax to favor or punish people. With the income tax, politicians have created a labyrinth of a tax code that gives breaks to the people they like and punishes those who they do not. Other than exempting particular goods or services, the sales tax is more resistant to political maneuvering.

 

While I strongly support eliminating the state income tax for a hundred reasons, such a move does not correct the biggest problem with state funding. The question of how we fund state government is less important than what we are funding. Wisconsin state government taxes so much because it spends so much. Every single state budget in my lifetime has increased spending from the prior budget.

 

Irrespective of the economic cycle, which political party is in power in Madison, population trends, or the ability of Wisconsinites to pay, state spending always goes up. It is more predictable than the tides. Until we control state spending, we will never take meaningful steps to lower the tax burden. All we are doing is finding better ways to pay.

 

*** For my fellow Christians who are celebrating the Birth of Christ this week, I wish you all a very Merry Christmas.

Eliminate the state income tax

My column for the Washington County Daily News is online and in print. Here’s a taste. Merry Christmas!

In my last column before Christmas in 2013, I climbed back on my old hobby horse to once again advocate for eliminating Wisconsin’s income tax and replacing some of the tax revenue with an increase in the sales tax. Eight years later almost to the day, former Governor Scott Walker is leading the charge with a group of tax reform groups to do exactly that. Armed with a study by Noah Williams at the University of Wisconsin-Madison’s Center for Research on the Wisconsin Economy, Walker and fellow reformers say that it is time for Wisconsin to become the 10th state without a state income tax.

 

[…]

 

While I strongly support eliminating the state income tax for a hundred reasons, such a move does not correct the biggest problem with state funding. The question of how we fund state government is less important than what we are funding. Wisconsin state government taxes so much because it spends so much. Every single state budget in my lifetime has increased spending from the prior budget.

 

Irrespective of the economic cycle, which political party is in power in Madison, population trends, or the ability of Wisconsinites to pay, state spending always goes up. It is more predictable than the tides. Until we control state spending, we will never take meaningful steps to lower the tax burden. All we are doing is finding better ways to pay.

Eliminate State Income Tax

Yes, yes, and more yes.

Americans for Tax Reform President Grover Norquist added, “Doing away with the state income tax would make Wisconsin more economically competitive both nationally and globally. In addition to making Wisconsin a much more prosperous place to live and work, a repeal of the state income tax would also increase the job-creating capacity of small businesses, most of whom file under the personal income tax system.”

 

In an interview, Walker noted that raising the sales tax isn’t as effective in Wisconsin as in other states where the tax covers every item. Wisconsin does not tax food and drugs, for example. Also, local towns typically have a tiny piggyback sales tax, unlike in other states.

 

He said it could be a model for other states.

 

“There’s no doubt about it,” Walker said. “I would expect that there will be tremendous interest in this,” he added.

“Billionaire’s Tax” is Gateway to Wealth Tax

Remember that the income tax was originally targeted at the very rich. Once we allow out government to tax unrealized gains, they will just keep moving the threshold down until middle class people are paying taxes on accumulated assets. That is the only way they will get to the amount of money that they want to spend.

Think of your house… if the value goes up by $50k over 10 years, you will have to pay taxes on that $50k even though you don’t sell the house. Oh, and you will also pay the capital gains tax when you do sell it.

Currently, wealthy Americans do not have to pay taxes on vast accumulations of wealth because they are taxed only once an asset is sold. Billionaires often borrow against their non-taxed assets, allowing them to spend enormous sums of money while effectively paying very low taxes relative to their income and worth.

Under the “Billionaire Income Tax” proposal, a summary of which was obtained by The Washington Post, the federal government would require billionaires to pay taxes on the increased value of assets such as stocks on an annual basis, regardless of whether they sell those assets. Billionaires would also be able to take deductions for any annual loss in value of those assets.

The plan would also set up a system for taxing assets that are not easily tradable, such as real estate. The tax would apply to billionaires and people earning more than $100 million in income three years in a row.

Appleton considers a transportation utility fee

My column for the Washington County Daily News is online and in print. I sound a warning bell about a push for a new kind of tax. Here’s a part:

The city of Appleton was one of the first municipalities in Wisconsin to implement a wheel tax. Now, in what might be the start of a new tax trend, they are considering implementing another new tax after finding that the wheel tax is not generating enough tax money to cover their spending.

 

[…]

 

What is a transportation utility fee? Invented in Fort Collins, Colorado, in 1984, a transportation utility fee is based on the rationale that the transportation infrastructure functions as a public utility like the water, sewer, or electricity systems. As a utility, users of the transportation system are charged based on their consumption of the system. Also, conveniently for the taxing authority, utility fees are not subject to the same strictures as taxes and can be implemented with more impunity by the local government.

 

Unlike water, sewer, and electricity, however, there is not a good way to actually measure the consumption of the transportation infrastructure without tracking each individual’s movement on the roads. Absent the technical, political, or cultural feasibility of always having the government tracking everyone’s movements (that might be coming), a government that wishes to implement a transportation utility fee must use proxy distinctions to divvy up the fee.

 

[…]

 

If we are to treat our transportation infrastructure as a utility, then we must also rescind all of the other taxes and fees that are levied to pay for our transportation infrastructure. Our transportation infrastructure is either a utility to be funded through user fees or it is a public good to be supported through general taxes. It cannot be both.

Evers Advances GOP Tax Idea

He is a petty, petty man. That fact being acknowledged… do it.

MADISON – Democratic Gov. Tony Evers offered a plan Wednesday to repeal a tax on businesses even though he vetoed legislation to do just that less than two months ago.

 

Republicans who control the Legislature called the move hypocritical. Evers said he was offering a better plan to end the state’s personal property tax than the one he vetoed, which he has said was drafted in a “haphazard” fashion.

 

“This legislation will continue our efforts to support businesses and families as they bounce back from the pandemic while ensuring our local governments have the aid they need to remain whole,” Evers said in a statement.

 

Republican Sen. Duey Stroebel of Saukville, a longtime backer of the effort to end the personal property tax, said the way Evers rolled out his plan “has all the hallmarks of political cover and not serious legislating.”

Memo to politicians: Cut taxes

Here is my full column that ran in the Washington County Daily News last week.

The Legislative Fiscal Bureau released two memos last week with very similar numbers about two separate items. The first was about tax collections. The second was about tax expenditures. They tell a story about government and governance in modern America.

 

The first memo was about how money from the Coronavirus Relief Fund is being allocated. As part of the first big coronavirus stimulus bill passed by Congress in March of 2020, the state of Wisconsin was allocated $1.99 billion from the CRF to be used to cover unbudgeted expenses related to the pandemic by government entities. The memo details how the CRF money is being spent on things like health care facilities, payments to hospitals, contact tracing, and other logical things that were directly impacted by the pandemic. The memo also details how the CRF money is being spent on things like movie theater grants, broadband expansion, corporate welfare to ethanol producers, higher education funding, and a nice $233 million bucket for “state agency reimbursements.”

 

The use of CRF money is a perfect example of government and governance operating poorly. The CRF was designed as a gigantic slush fund to take tax dollars from all Americans in the form of federal taxes to be paid by future taxpayers to give to state and local governments in the present. By law, the money must be spent by the end of this year or it must be returned to the federal treasury. That is why the money is being poured into pet projects like broadband expansion, state agencies, and government education systems. Whether they actually need the money or actually incurred pandemic- related expenses is immaterial. What is more important is that the state spend the money before the deadline.

 

One part of the CRF rules is telling. In order to facilitate “administrative convenience,” government school districts can spend up to $500 per pupil without being required to document the specific uses of the spending. The money will be arbitrarily “presumed to be eligible.” This amounts to $410 million in additional government spending that may or may not have anything to do with the pandemic.

 

The second memo that the LFB released had to do with a surplus in tax collections. When the Legislature wrote the budget in 2019 before the pandemic, they estimated that the state tax laws would collect about $17.6 billion in taxes for the general fund. The preliminary final estimate shows that the state actually collected $19.6 million in taxes. The state collected about $1.9 million more in taxes than they thought they would.

 

Bearing in mind that the original estimate did not take into account the pandemic, the surplus tax collections are astounding. In the 2020-2021 state budget, the Republicans in the Legislature fought off Governor Evers’ attempt to raise taxes and cut them instead. The result is what we generally see when government cuts taxes — tax collections go up.

 

The simple reason for this is because money is taxed when it moves. When people have more money in their pockets because taxes are lower, they do not bury it in the backyard. They use it. When they spend it or invest it, the money is taxed, thus resulting in higher collections. In particular, the greatest contributor to the tax surplus was higher corporate income tax collections. Corporations took their tax cuts, invested them back into their businesses, and grew taxable profits.

 

There is a point at which cutting taxes will result in lower tax collections because the economy is already flush with money, but all indications are that the state of Wisconsin could still enact large tax increases and still see tax collections increase. This is because Wisconsin’s tax burden is already much higher than it should be to balance tax collections with economic movement.

 

The tax surpluses are an example of government and governance doing something well. The Republican tax cuts put money directly into the pockets of taxpayers and business owners without going through layers of government bureaucracy and expense. The result was that tax collections went up and the state could provide almost the same amount of relief as they received from federal taxpayers in the CRF.

 

The LFB’s two memos highlight how cutting taxes not only results in more taxes being collected, but they also render politicized and bureaucratic relief funds unnecessary by just letting taxpayers keep the money they earned.

 

The best government is the government that governs least.

Memo to politicians: Cut taxes

My column for the Washington County Daily News is online and in print. Here’s a part:

Bearing in mind that the original estimate did not take into account the pandemic, the surplus tax collections are astounding. In the 2020-2021 state budget, the Republicans in the Legislature fought off Governor Evers’ attempt to raise taxes and cut them instead. The result is what we generally see when government cuts taxes — tax collections go up.

 

The simple reason for this is because money is taxed when it moves. When people have more money in their pockets because taxes are lower, they do not bury it in the backyard. They use it. When they spend it or invest it, the money is taxed, thus resulting in higher collections. In particular, the greatest contributor to the tax surplus was higher corporate income tax collections. Corporations took their tax cuts, invested them back into their businesses, and grew taxable profits.

There is a point at which cutting taxes will result in lower tax collections because the economy is already flush with money, but all indications are that the state of Wisconsin could still enact large tax increases and still see tax collections increase. This is because Wisconsin’s tax burden is already much higher than it should be to balance tax collections with economic movement.

 

The tax surpluses are an example of government and governance doing something well. The Republican tax cuts put money directly into the pockets of taxpayers and business owners without going through layers of government bureaucracy and expense. The result was that tax collections went up and the state could provide almost the same amount of relief as they received from federal taxpayers in the CRF.

 

The LFB’s two memos highlight how cutting taxes not only results in more taxes being collected, but they also render politicized and bureaucratic relief funds unnecessary by just letting taxpayers keep the money they earned.

 

The best government is the government that governs least.

Don’t be ‘That guy’

Here is my full column that ran in the Washington County Daily News last week.

I hate group projects. How many times have you heard that statement or uttered it yourself ? When a group project involves a group of people voluntarily coming together to achieve a common goal, they can be terrific. But more often, group projects like those in school entail a hodgepodge of people with different motivations, varying work ethics, and suspect integrity who are thrown together to accomplish an assigned task.

 

Every group project seems to have “that guy.” You know the one. He’s the lazy slacker with a bad attitude. He shows up to the first couple of meetings for the group project. He offers a thought or two, but they are terrible. He then proceeds to bash everyone else’s ideas before retreating to sulk for the rest of the project. He doesn’t contribute anything meaningful and disappears for days or weeks at a time. The rest of the group gives up on him and finishes the project without him.

 

When the project is presented and is well received, that guy is suddenly everywhere. He is taking credit for the work and acting as if every great idea were his. With shameless audacity, that guy shoves his colleagues out of the way to bask in unearned adulation for work that was not only someone else’s, but that he actively maligned. In the great state budget group project, “that guy” is Governor Tony Evers, and his budget project teammates in the Legislature are justifiably piqued at his behavior. When Governor Evers first proposed his budget in February, it included a massive 12% spending increase that needed a tax increase of $1 billion to support it. Evers argued that Wisconsin needed to tax and spend more than ever in order to fund, “the future we dream.” Several weeks ago, the state announced that unprecedented tax collections would potentially result in a massive surplus in tax revenue in the state’s coffers. Governor Evers was quick to trumpet that every dollar of that surplus should be plowed into even more government spending. For his entire tenure in office, Evers has advocated for more taxing and more spending at every turn.

 

As the Legislature’s Joint Finance Committee finished its work on the budget a month ago, the Republicans included a $3.3 billion tax cut. Not a single Democrat on the committee voted for the tax cuts. Instead, the Democrats lambasted the tax cuts as a missed opportunity and a sop to the rich.

 

When the final budget that included those tax cuts was passed by the Assembly, only four Democrats voted for it. In the Senate, only three Democrats voted for the final budget. Democrats slammed Republicans for passing tax cuts with Democrat Senator Chris Larson going so far as to accuse Republicans of, “kicking the dust in the faces of our kids.”

 

Yet after all of the scorn and derision that Evers and the Democrats threw at Republicans for cutting taxes, Evers was first to step to the front of the class and claim credit for them. When he signed the tax-cutting budget (after reducing the tax cuts with his veto pen), Evers took credit while declaring, “I’m providing more than $2 billion in tax relief and cutting taxes for middle-class families at a time when our economy and families need it most.”

Gone were the lamentations about not spending money. Absent was any acknowledgment that Evers had actually proposed a tax increase in his budget. Missing was a hint of credit for the Republicans who actually wrote and passed the budget that included the tax cut. Even though Evers vociferously opposed cutting taxes every step of the way, he was quick to take credit for them when they proved popular.

 

In every possible way, Governor Evers is “that guy.” After his initial budget proposal that included a tax increase, he sulked in the corner and threw insults at Republicans as they crafted a real budget. When the work was done and included really popular things like a huge tax cut, Evers took credit for the good work. He did not even have the common decency to admit that he opposed the tax cuts or give credit to the people who did the hard work to include them.

 

Just like when Evers was caught multiple times plagiarizing the work of others during his tenure as the state school superintendent, Evers has demonstrated again that he has no scruples about taking credit for the work of others when he thinks it will serve his personal ambitions. His inability to give even a little credit to others or admit when he was wrong reveals an insecure man of poor character. He is the guy that nobody ever wants on their group project.

Republicans add massive tax cut to budget

Here is my full column that ran in the Washington County Daily News last week:

Bolstered by new financial projections that show a massive influx of taxes, the Republicans on the Wisconsin’s legislative Joint Finance Committee voted to do the right thing – give the money back. More precisely, they voted to never collect the excess taxes in the first place by lowering tax rates for the people paying the bills. Especially after a very tough year for so many Wisconsinites, the Republicans’ respect for taxpayers is laudable.

 

The largest proposed tax cut is a very simple cut in the state income tax for most taxpayers. Wisconsin is one of 41 states that continues to impose an income tax. Wisconsin’s income tax is progressive in that it is divided into four brackets and taxes at progressively higher rates as people’s income increases. The Republicans focused their income tax cut at the largest bracket.

 

Under the Republican tax cut proposal, individuals earning between $23,930 and $263,480 and married couples earning between $31,910 and $351,310 would see their tax rate reduced from 6.27% to 5.3%. That bracket covers the majority of Wisconsin’s income taxpayers and directly impacts the middle class by letting them keep more of their hard-earned money. The proposed income tax cut would allow a large percentage of taxpayers to keep a total of $2.75 billion of their money instead of sending it to Madison for politicians to spend. That is $2.75 billion that will be put into Wisconsin’s economy and directly benefit families and businesses throughout the state. The second tax cut that Republicans put into the budget is a reduction in property taxes by $650 million over the biennial budget. This tax cut proposal is more of a shift than a real tax cut. The budget would push more state taxpayer spending to technical colleges and local schools through the state equalization aid formula but would require those government units to reduce their property taxes by a total of $650 million. The budgetary maneuvering would not reduce aggregate state and local government spending, but it does secure federal COVID relief money for schools while also extending a property tax decrease for taxpayers.

 

All told, the two tax cuts inserted into the budget add up to $3.4 billion is tax relief for a wide swath of taxpayers. According to lawmakers, the average Wisconsin taxpayer would see $1,200 in tax savings over two years. That is $900 in income tax savings and $300 in property tax savings. That is real money left in the pockets of real Wisconsinites.

 

The Republican tax cuts were added to the proposed state budget after all of the state government’s government programs had been funded and spending increased. The Republicans voted to increase spending on schools; on higher education; on law enforcement; on shared revenue; on almost everything. The Republicans are advancing a budget that increases spending throughout state government and spends more overall than any other budget in the history of the state of Wisconsin. All of the taxpayers’ commitments have been met – and then some.

 

Yet, despite unprecedented spending, the state is still projected to collect record high taxes. The state government is already going to collect all of the taxes it needs to pay for the record spending. All the Republicans are doing is what any honest cashier would do when a customer accidentally hands them a $20 instead of a $10. They are giving the taxpayers their change back.

 

The Democrats, on the other hand, want to take those record taxes and spend them or redistribute them. In their world view, every dollar spent by a politician in Madison is better spent than if it were spent by a farmer in Allenton or a teacher in Brillion. It is a philosophy rooted in arrogance and avarice.

 

For this reason, Governor Tony Evers is likely to use his powerful line-item veto to veto part or all of the tax cuts. If he does veto the tax cuts, the money will still not be appropriated to spend on anything. It will merely be collected by the government to create a surplus for a future legislature and governor to spend or return. Evers would be taxing excess tax money from taxpayers for no other reason than because he could.

 

Wisconsinites can do far more good for their families, businesses, and churches with $3.4 billion and any politician in Madison ever could. Let us hope that Governor Evers cares more about Wisconsinites than some of his fellow Democrats in the Legislature who voted against the tax cuts.

 

Republicans add massive tax cut to budget

My column for the Washington County Daily News is online and in print. Here’s a sample:

All told, the two tax cuts inserted into the budget add up to $3.4 billion is tax relief for a wide swath of taxpayers. According to lawmakers, the average Wisconsin taxpayer would see $1,200 in tax savings over two years. That is $900 in income tax savings and $300 in property tax savings. That is real money left in the pockets of real Wisconsinites.

 

The Republican tax cuts were added to the proposed state budget after all of the state government’s government programs had been funded and spending increased. The Republicans voted to increase spending on schools; on higher education; on law enforcement; on shared revenue; on almost everything. The Republicans are advancing a budget that increases spending throughout state government and spends more overall than any other budget in the history of the state of Wisconsin. All of the taxpayers’ commitments have been met – and then some.

 

Yet, despite unprecedented spending, the state is still projected to collect record high taxes. The state government is already going to collect all of the taxes it needs to pay for the record spending. All the Republicans are doing is what any honest cashier would do when a customer accidentally hands them a $20 instead of a $10. They are giving the taxpayers their change back.

 

The Democrats, on the other hand, want to take those record taxes and spend them or redistribute them. In their world view, every dollar spent by a politician in Madison is better spent than if it were spent by a farmer in Allenton or a teacher in Brillion. It is a philosophy rooted in arrogance and avarice.

What to do with a surplus?

Here is my full column that ran in the Washington County Daily News last week. I’m glad to see that the legislative Republicans were of the same mind as they pushed a $3.4 billion tax cut into the budget.

A new estimate from Wisconsin’s Legislative Fiscal Bureau (LFB) shows that Wisconsin state government will collect billions of dollars in taxes above their original estimates. The political wrangling between Republicans and Democrats over this unexpected windfall reveals the yawning divide between the political camps.

 

Whenever the state legislature crafts a budget, they must estimate the taxes that the state will collect. As the national and state economy changes and actual collections are counted, the LFB periodically updates these estimates to inform the Legislature. In January, the LFB issued an estimate for general fund tax collections and made adjustments to them when various state and national laws were passed changing the tax laws.

 

As the state nears the end of the current budget and fiscal year, the LFB prepared its most recent estimate that records “unprecedented” tax collections through May of this year and forecasts that for the time period encompassing the remainder of this fiscal year and the 20212023 biennium will exceed previous estimates by almost $4.5 billion.

 

To put it another way, the state of Wisconsin is projecting to collect the equivalent of $762 more in taxes from every man, woman, and child in Wisconsin than what they thought they would collect a few months ago. While politicians welcome this unexpected surplus, the people actually paying the taxes do not share their joy.

 

Democrats throughout Wisconsin are championing ways to spend the projected tax surplus on more and bigger government. Democrat Governor Tony Evers and legislative Democrats are pushing to pump more money into thinks like the government education system, transportation, welfare, and the normal litany of liberal priorities.

 

Meanwhile, Republicans in the Legislature are championing ways to cut taxes to ensure that the projected surplus never materializes. With the philosophy that it is the people’s money, Republicans are exploring how to make sure that the people never send the money to the state coffers in the first place.

 

The difference in philosophy is stark. Democrats see record tax collections as free money to spend. It is as if they won the lottery and the only question is how they will spend their good fortune. Republicans, for the most part, see record tax collections as evidence that the government is confiscating too much from the people and they should cut taxes to make sure that the government does not over collect.

 

Both parties must remember that an estimate is just that: an estimate. The LRB gave an estimate in January that said one thing. Six months later, they have calculated another estimate based on what has changed since January. In that short time, the estimate went up dramatically based on actual tax collections and an improved economic forecast. An estimate is as good as it can be the day it is written, but change by the next morning.

 

Things change. Economies slip into recessions. War, or the threat of war, can change the economy. Trade policies impact some areas of the economy more than others. Key Wisconsin industries may be disrupted. When politicians make decisions to spend money that is not actually in the bank, they are obligating taxpayers to spend that money whether the projected surplus materializes or not.

The other economic wild card that is rearing its head in Biden’s America is a potential return to double-digit inflation. The trillions of printed dollars spewing out of Washington are having the unavoidable effect of devaluing the dollar. It is a simple principle. If the government is printing currency faster than the underlying economy can absorb it, the value of each dollar decreases. This inflation hits the lower and middle classes the hardest as they see the price of normal goods and services increase faster than their incomes. Inflation has been increasing at the fastest rate in decades and does not show any sign of slowing.

 

As Democrats salivate over spending a projected tax surplus, the families paying for that surplus will also be having their budgets squeezed by raging inflation. It is a budgetary pincer that will squeeze the middle class at a time when the middle class is just recovering from a pandemic.

 

The decisions for the Legislature should be a very simple one. If the state collects more taxes than it planned to, then give it back to the people who paid it. They should not redistribute it to people who did not pay the taxes and they should not spend it on things that make politicians feel good about themselves.

 

Just give it back. It’s not yours.

Biden Tax Plan Would Hurt The Emerald Isle

I think it’s kind of funny that the Irish were celebrating Biden’s win due to his Irish heritage and he might tank their economy.

For the last 20 years Ireland has had a simple message: invest here and you will pay just 12.5% tax on your Irish profits.

That compares favourably to headline corporation tax rates of 19% in the UK, 30% in Germany and 26.5% in Canada.

 

It is an article of faith in Irish politics that the 12.5% rate has been vital to attracting US investment.

But that tax advantage could be seriously undermined if President Biden gets his way.

 

The most striking of his proposals – and the one of most consequence for Ireland – is for a global minimum corporate tax rate.

 

The US Treasury Secretary Janet Yellen has suggested a 21% minimum rate.

 

“We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” she said in a speech last week.

 

“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations.”

 

Essentially that would mean if a company paid tax at the lower Irish rate, then the US (or other countries) could top up that company’s tax in their jurisdiction to get it to the global minimum.

 

So if a US company had a presence in Ireland primarily for the tax advantage, that advantage would disappear.

Washington State Eyes Wealth Confiscation

Remember that the income tax started out as a tax on only the very rich too.

OLYMPIA, Wash. — Washington state’s richest residents — including Jeff Bezos and Bill Gates — would pay a wealth tax on some financial assets under a bill proposed by a lawmaker who says she is seeking a fair tax code at a time when so many people are struggling due to the pandemic.

 

Under the bill, a 1% tax would be levied on “extraordinary” intangible financial assets including cash, publicly traded options, futures contracts, and stocks and bonds — but not income. The first $1 billion in value would be exempt from the tax that would apply to residents’ taxable worldwide wealth.

Tax Collections Down

As expected.

Preliminary information on taxes collected by DOR for the month of May, 2020, is now available. As anticipated, due to the coronavirus pandemic and its impact on employment and the economy, the May report indicates a continued reduction in collections. May, 2020, preliminary tax collections were $1,261 million, which is $66 million below collections of May, 2019. And, for the 11 months of the current fiscal year, collections are $380 million below those over the same 11 months of 2018-19.

Although collections for May reflect a continued decline, the decline is significantly less than that shown in the April collection report. April, 2020, collections were $870 million below April, 2019, collections. In contrast, the May, 2020, collections are $66 million below those for the same month in 2019.

The decline in May collections is primarily attributable to lower state sales and use taxes, which reflects that the coronavirus pandemic has severely impacted economic activity in the state and tax collections. Reduced collections for the 11 months of the current fiscal year have been affected by the extension of income and franchise tax filing deadlines from April to July 15 in 2020. It is important to note, however, that income and franchise tax returns and estimated payments filed by July 15 will accrue to state fiscal year 2019-20 under the state’s budgetary cash and modified accrual method of accounting.

Two Million Taxpayers Would Receive Tax Cuts Under GOP Bill

But Evers will still veto it. It’s his money… not yours, don’t you know?

More than 2 million taxpayers would see a tax cut from a Republican passed bill in the Wisconsin legislature, according to an analysis from the Center for Research on the Wisconsin Economy (CROWE).

“We find it would reduce taxes for about 2 million taxpayers and reduce state tax revenue by about $200 million, so the reduction per affected taxpayer is about $100,” the CROWE study found. “Low-to-middle-income taxpayers would benefit the most. Moreover, the expansion would reduce the effective marginal tax rates (MTR) and thus provide work incentive for some low-to-middle-income taxpayers, although it would also raise the effective MTR and thus reduce the work incentive for some relatively high-income taxpayers.”

The state Senate and Assembly both passed the tax-cut package Thursday on largely party-line votes.

Gov. Tony Evers opposed the cuts, but has not said if he will sign or veto the bill.

Tax Cut Heads to Evers’ Desk

Remember that we do not have a tax surplus… yet. We have a projection that says that we will have a surplus at the end of the budget next summer. Bearing that in mind, this is a good bill. It takes a projection that says that the state is collecting more taxes than it needs and reduces the taxes accordingly. If the projection is wrong and we head into deficit, then they can adjust taxes the other direction. To my point in a column a few weeks ago, however, this is not spending money we don’t have. It isn’t spending anything at all. It is simply having the government collect LESS so that it does not run as much of a surplus over the term of the current budget.

The tax cut bill would would deliver an average reduction of $106 for most qualifying filers. Married couples who file jointly would see an average cut of $145; all other filers would see an average reduction of $81. The bill also would reduce taxes for manufacturers by nearly $45 million by exempting their machinery and tools from property taxes and trim state debt by $100 million.

This is a good bill. It is unfortunate that Governor Evers will likely veto is so that the government can overcharge for their services and spend more.

Time for Flat Tax?

Absolutely. Or no state income tax. Other states do it. Wisconsin could too.

[Madison, Wisc…] With the recent news from the Legislative Fiscal Bureau that Wisconsin’s economy continues to be strong and tax revenue is expected to be $818 million more than originally anticipated at the end of the 2019-2021 biennium, the John K. MacIver Institute for Public Policy is asking Governor Tony Evers and the Legislature to consider adopting a 3% flat tax.

MacIver President Brett Healy issued the following statement:

“The most recent fiscal estimate is great news and another reminder that fiscal discipline, sensible regulation and cutting taxes has been a winning recipe for all Wisconsinites. We should use this momentum, build on our record of success and lock in long-term and meaningful tax reform that will benefit all Wisconsinites. Now is the time to adopt bold tax reform that will make Wisconsin an economic powerhouse for generations to come.”

Wisconsin’s top income tax rate of 7.65% is the 10th highest in the country and our lowest income tax rate of 3.86% is the 6th highest rate among states with a progressive income tax. Our lowest income tax rate was previously tied at the 4th highest among states with a progressive income tax before 2019 Act 9 and Act 10 tax reforms lowered the two lowest income tax bracket rates.

Though our lowest income tax rate was reduced in 2019, Wisconsin is still one of the worst places for the working poor in terms of the tax rate they pay. If Wisconsin adopted a 3% flat income tax rate, Wisconsin would have the lowest tax rate in the Midwest and the 2nd lowest flat tax rate in the entire country.

“We can use the temporary revenue surplus to create a simpler, fairer tax code that will lower the tax burden for everyone,” Healy said. “A low 3% flat tax will help Wisconsin attract new families, recruit new businesses, keep our retirees from leaving and entice college graduates to work in the state.”

 

What to do with a surplus?

Boy, if this story doesn’t perfectly illustrate the state of politics in Wisconsin. Tax collections are way up thanks to a booming economy under President Trump and policies put in place by Wisconsin Republicans. Republicans want to give the surplus back to the people. Democrats want to spend it. Evers is playing pickleball.

MADISON (AP) — Wisconsin tax collections are expected to come in more than $818 million above projections made last summer, an increase reported Thursday that will fuel the push to make an election year tax cut.

Republicans who control the Legislature are discussing a tax cut, while Democratic Gov. Tony Evers has been more cautious and voiced concerns about meeting other priorities and warding against a future economic downturn. Senate Republicans, whose leader Scott Fitzgerald is running for Congress, are pushing to lower property taxes. Assembly Republicans also support cutting taxes, but aren’t fully behind lowering property taxes.

Fitzgerald said he will continue to work on a property tax cut that can be passed before the Senate adjourns for the year in March.

Assembly Speaker Robin Vos said Republicans would not ‘‘grow the size of government’’ but instead would look at paying down debt or cutting taxes.

He didn’t specify which taxes or debt might be targeted.

Democratic Assembly Minority Leader Gordon Hintz said any surplus should be used to address areas of urgent need, including bolstering school-based mental health and funding for the University of Wisconsin System.

Evers did not immediately return a message seeking comment.

Gifts in the mail

My column for the Washington County Daily News is online and in print. In it, I take a quiet stroll through my property tax bill and look for the source of the tax increases. In every case, the government taxing me is increasing spending. Coincidence? I think not. Here’s a taste:

It is that time of year again! You can feel the excitement slicing through the air like hard sleet. People all over Wisconsin are going to their mailboxes and finding their property tax bills awaiting them. Despite years of politicians promising to control property taxes, Wisconsin still has the fourth highest property tax burden in the nation.

As I wrote in a column a few weeks ago, when it comes to property taxes, the levy is everything, and spending determines the levy. When a government uses the property tax, they begin by determining how much total money they plan to spend. Then they determine how much of that spending will be funded by the property tax. That number is the levy. Then the levy is divided into the aggregate property value and the mill (tax) rate is determined. When you hear politicians bragging about the mill rate, be wary. It is one way that they camouflage more spending and higher taxes.

To illustrate this, let us walk through my property tax bill and the five governments that are forcing me to send them money by threatening to take away my home if I refuse. My example is anecdotal, of course, but I encourage all of you scrutinize your property tax bills when they arrive. The assessed value of my home remained unchanged between 2018 and 2019, so the tax changes shown are not reflective of a change in home value.

[…]

In total, my property taxes increased 3.4% since last year to pay for an aggregate spending increase of $5.9 million by governments.

For those who wonder why Wisconsin’s property taxes are so high, one need only look at the budgets of the governments that feed off of the property tax. Bloated spending that gets more bloated every year results in higher taxes. The reason for high taxes is simple: it’s the spending.

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