Boots & Sabers

The blogging will continue until morale improves...

Tag: Taxes

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.

West Bend School District Levies 7.17% Tax Increase

I see a story in the Washington County Daily News today where the West Bend School District has returned to the cloudy language of taxes.

WEST BEND — Good news for property owners in the West Bend Joint School District: the budget is balanced and the mill rate — read: taxes — will not increase from last year.

The district’s mill rate will remain $7.97 per $1,000 of assessed value. Thus the owner of a home valued at $203,000, for example, will pay $1,617.91 in taxes to the district.

There are several factors behind the district’s decision not to raise taxes.

West Bend is a low spending district, and was awarded an extra $299 per student in state aid for the coming year. It does have declining enrollment…

This is the game that the school district and other taxing bodies like to play. They try to pretend that the mill rate is equivalent to tax burden. It is not. For several years, after a lot of public discussion, we finally got the West Bend School District to stop doing this. It looks like they have returned to their old ways.

Here’s the deal… the tax burden is the total money extracted from the taxpayers. If the district decides that they want to extract $40 million from the taxpayers through a property tax levy, they simply divide that amount into the aggregate property values to derive the tax rate – called the mill rate. It is a simple calculation. When it comes to discussing the tax burden, the mil rate and the property values are irrelevant. The tax levy is everything.

In this case, despite receiving an increase in state aid, the West Bend School District is increasing property taxes by 7.17%.

Last year, the school district levied $39,174,600. This year, they are going to levy $41,983,435. That is a 7.17% increase in taxes no matter how you slice it.

The school district is celebrating that they kept the mill rate flat, but that is only because property values in the district have increased thanks to the good economy. They are simply raising taxes at about the same pace as property values are increasing, thus keeping the rate flat.

Why does this matter?

It matters because, despite the proclamations of the school district, the tax burden is increasing for a school district with declining enrollment. For example, let’s say you are a senior on a fixed income living in a house that was valued at $200,000. Your property taxes for the school district were $1,594 last year. After a reassessment, your house is now valued at $218,000. Even though the school district is keeping the mill rate the same, now your property taxes for the school district will be $1,737.46 – a $143.46 increase. Your income didn’t increase. You don’t derive any value from the increased property value unless you sell your house. But you are paying more. Yes, your taxes went up despite the district maintaining a flat tax rate.

The mill rate in meaningless. It is simply a derived number. The levy is everything. The levy is how much money the taxing body is extracting from the taxpayers. And however they want to spin it, the West Bend School District will increase property taxes 7.17% in a single year.

Credit to the Finance Director, Andrew Sarnow, for making this point later in the story:

“Early estimates say they will not give us much more money; in fact, it probably will be a little less,” he said. “So where does the rest of the money come from if they say we can have a little more money per child? Property taxes — which is why our levy is going up about seven percent.”

But property values are growing by about the same amount. This year, the district is worth almost $5.3 billion, which is an increase from the $4.2 billion of value last year. This is growth in size; new residences or

businesses, with a very small increase from homes getting reassessed. If homes were reassessed for a higher value, then the taxation rate does not increase but more money is acquired through taxes. A homeowner’s taxes for everything, not just the school district, would also increase if this were true. But the seven percent increase came largely through growth and not reevaluation.

What I disagree with is the supposition that most of the property value increase is from growth. Some of that is true, but in 2018, the residents of West Bend saw an average property value increase of 12% after a city-wide assessment. The City of West Bend is not the entire school district, but it is the lion’s share of property value.  So if my property value went up 12% and my mill rate is flat, did my taxes go up? yes, they did. And did my income necessarily rise to meet the tax burden? Nope. So the tax burden continues to eat into my disposable income and standard of living.

Rich Lefties Support Wealth Tax

Heh.

A group of nearly 20 wealthy Americans on Monday released a letter asking for all 2020 presidential hopefuls to support a “moderate wealth tax” on the richest one-tenth of the richest 1 percent of Americans.

“America has a moral, ethical and economic responsibility to tax our wealth more. A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity, and strengthen our democratic freedoms,” the letter says, as published by The New York Times.

“Instituting a wealth tax is in the interest of our republic,” it continues.

The document is signed by financier George Soros, Facebook co-founder Chris Hughes, heirs like Abigail Disney and others.

The letter calls for the tax revenue to be used in “smart investments for our future,” including addressing climate change, providing student loan debt relief and universal child care, modernizing infrastructure and providing tax credits for low-income families.

Here’s the thing… there is nothing stopping these folks from liquefying their assets and cutting a check to the Treasury Department. But that’s not what they want. They want to tax YOUR accumulated wealth. If you think that they are going to stop at just taxing the top tenth of one percent, you’re nuts. Remember that when the income tax was implemented in 1913, it only taxed people making over $20,000 per year (at 1%, no less). That’s would be people making over $507,000 in today’s dollars. That is, conveniently, less than 1% of income earners in today’s America.

Then, over time, the threshold was lowered and the rates increased. The people who wrote this letter aren’t stupid. They know that. What they want is a wealth tax to be implemented so that it can be eventually expanded to include anyone with any accumulated wealth. It will never end with just the super rich paying it. They are just drying to open the door on a wealth tax by appealing to people’s envy.

So…. no.

Feeling the weight of government

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

April 15. A date that lives in infamy. As the date by which all Americans must submit their income tax forms to make sure the government has extracted enough hard-earned money to fund the bureaucracy, April 15 also serves as a good date to contemplate the cost of government. Given that this April 15 is on the cusp of Wisconsin’s biennial budget debate, it is also a good date to look at how much more costly our new governor wants to make our government.

According to the Tax Foundation, Tax Freedom Day in 2019 is April 16. That means that every dollar that every single American earned up until April 16 is needed to pay the nation’s total tax bill of $5.29 trillion. The nation’s total tax bill is more than the nation’s total combined bill for housing, clothing, and food. Big government isn’t cheap. In Wisconsin, Tax Freedom Day comes even later on April 19. The cost of Wisconsin’s government is still more than most states.

If Governor Tony Evers has his way, Wisconsin’s Tax Freedom Day will push later into the year like Illinois or New York. The governor’s budget proposal includes over a billion dollars in tax increases and would increase taxpayer disparity.

When the Supreme Court ruled last year that states can collect sales and use taxes on internet purchases, Gov. Scott Walker and the Republicans neutralized the tax burden for Wisconsinites by offsetting the new sales tax collections with an equal across-theboard income tax cut. Governor Evers would reverse that decision and give the entire tax savings to only those in the lowest tax bracket.

At the same time, Evers’ budget proposes increasing the Earned Income Tax Credit, a welfare scheme paid through the income tax system, and lower taxes in the lower tax brackets. All of these ideas would lower income taxes for those at the lower end of the income scale.

In order to make up for tax decreases to the lower brackets, Governor Evers would increase taxes on the higher brackets by forcing single people who earn more than $100,000 and couples who earn more than $150,000 to pay regular income taxes on their capital gains. This is estimated to increase taxes by $505 million on Wisconsin’s higher earners.

For some perspective, figures calculated by the Wisconsin Taxpayers Alliance show that income filers earning over $100,000 comprise about 12% of all income tax payers, but they pay over 61% of all income taxes in the state. Evers’ budget proposal would continue the effort to foist more and more of the cost of government on an ever smaller group of income earners.

Not content to only hammer individual taxpayers with higher taxes, Evers would also cap the Manufacturers and Agriculture Credit to a mere $300,000 of income for manufacturers. This is projected to result in a whopping $516.6 million in higher taxes on Wisconsin’s manufacturers.

Just in case anyone thought they might escape Evers’ tax increases, he also proposed to increase gas taxes by eight cents a gallon and then index the tax increases to inflation. That way taxes would automatically increase without politicians having to bother going on record to do it with a vote. This would raise taxes another $485 million through the budget term.

Governor Evers has made it perfectly clear how much he would raise taxes if he had the power to do so on his own. As the legislative Republicans formulate their budget proposals, they should begin with the mirror image of Governor Evers’ proposal. The Republicans should start with a billion dollar tax cut for all Wisconsinites and let the Governor try to negotiate from that starting position.

Wisconsin’s tax burden is not good, but it has been improving for the last eight years. Republicans should fight hard to maintain that trajectory for the benefit of all Wisconsinites.

Feeling the weight of government

My column for the Washington County Daily News is online and in print. It seemed appropriate on tax day to take another look at all of the tax increases that Governor Evers wants to impose on us. Here’s a taste:

Governor Evers has made it perfectly clear how much he would raise taxes if he had the power to do so on his own. As the legislative Republicans formulate their budget proposals, they should begin with the mirror image of Governor Evers’ proposal. The Republicans should start with a billion dollar tax cut for all Wisconsinites and let the Governor try to negotiate from that starting position.

Wisconsin’s tax burden is not good, but it has been improving for the last eight years. Republicans should fight hard to maintain that trajectory for the benefit of all Wisconsinites.

 

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