Today’s Circuit Court Ruling Reinforces the Inconsistencies in State Lawmakers’ Reasoning
Should state lawmakers turn down federal funds whenever there’s a risk that the funding in question could be cut in future years? If so, why is Wisconsin proceeding with major highway and bridge construction plans at a time when Congress is using short-term gimmicks to keep the Highway Trust Fund from becoming insolvent? And why did Wisconsin cut BadgerCare eligibility in half for parents, based on reliance on federal funding to subsidize the federal health insurance Marketplace?
That last question has gotten little attention over the past year, but it will be raised more often following a ruling today by a subset of the DC Circuit Court of Appeals. Two of the three judges participating in that ruling concluded that federal subsidies for the health insurance Marketplace can only go to people in states that set up their own Marketplaces. Read more
A bill under consideration in the U.S. House of Representatives could limit Wisconsin’s flexibility in applying sales tax and make it more difficult to invest in schools and communities, a new report from the Center on Budget and Policy Priorities shows.
A committee in the House recently approved a bill that would prohibit all state and local taxation of Internet access. Currently, there is a moratorium on new taxes on Internet access fees, but seven states with pre-existing internet access taxes – including Wisconsin – were grandfathered in. This new proposal would eliminate the exception for Wisconsin and other states, and permanently ban all taxes on Internet access.
For Wisconsin, this restriction would reduce the resources the state uses to invest in public education, a healthy workforce, and a solid transportation network. Wisconsin would lose $127 million in tax revenue in 2015 if prohibited from taxing Internet access – resources that could be used to make Wisconsin a more attractive place to live and do business. Read more
Walgreens portrays itself as America’s pharmacy, located in communities across the country “at the corner of happy & healthy.” But if a group of hedge funds gets its way, Walgreens could become a “foreign” corporation for tax purposes – operating at the intersection of lawful and shameful.
Report Released Today Recommends State and Federal Reforms to Close Offshore Tax Havens
Maine legislators recently gave preliminary approval to a bill that could make it the third state to pass legislation to crack down on corporate tax avoidance in off-shore tax havens. The proposed legislation would close the so-called “water’s edge” loophole by requiring corporations to report income from a list of 38 known offshore tax havens. Passage of the bill would generate an estimated $10 million per year (in a state less than a quarter of the size of Wisconsin).
Oregon and Montana have already enacted such legislation. In 2010, Montana recovered $7.2 million, and state analysts expect Oregon to recover $18 million this year. The problem costs states about $1 billion, according to a report by US PIRG report. You can read more about the bills in these three states in an April 3 Washington Post blog post. Read more
The FY 2015 budget proposal unveiled by the President this week addresses an issue that many politicians, researchers and commentators across the political spectrum have recently been talking about – providing assistance to low-income working adults who don’t have dependent children. We were very pleased to see the part of his budget that would help that long-overlooked population by making more “childless” workers eligible for the federal Earned Income Tax Credit (EITC) and increasing the small credit for those who are already eligible.
The EITC encourages and rewards work, offsets federal payroll and income taxes, and boosts living standards. As the Center on Budget and Policy Priorities (CBPP) points out: “Next to Social Security, the EITC combined with the refundable portion of the CTC [child tax credit] constitutes the nation’s most powerful anti-poverty program.” However, the federal EITC currently provides little or no benefit for adults who don’t have dependent children, and the Wisconsin EITC doesn’t apply to that population. Read more
Many highly profitable Fortune 500 companies pay little or no federal corporate income tax. In fact, an analysis of five years of tax data during the period 2008 and 2012 from 288 profitable Fortune 500 companies finds that 26 paid no federal corporate income tax over that five-year period, and one-third paid a U.S. tax rate of less than 10 percent during that period.
A broad range of Wisconsin organizations sent a letter to state senators today in opposition to the resolution (AJR 81) calling for a Constitutional Convention on a balanced budget amendment. The letter raises substantive concerns about putting a balanced budget amendment into the U.S. Constitution and procedural concerns about the risks of holding a convention to amend the Constitution for the first time in over 225 years. It cites the trepidations expressed by Constitutional experts regarding the unpredictability of what might emerge from a Constitutional amendments convention.
The substantive concerns about a balanced budget requirement include the following:
- It would deepen and lengthen recessions by making it extremely difficult for federal lawmakers to increase spending when it is most needed for counter-cyclical safety net programs, such as food stamps, unemployment insurance, and Medicaid. “Since tax revenue typically falls as the need for those programs rises, a balanced budget would require either making cuts to these safety net programs and other areas of spending at the worst possible time, or increasing taxes at a bad time for the economy.”
- “…Depending on how it is written, a balanced budget amendment might also make it very difficult for Congress to respond to national disasters and other emergencies.
Congress has failed to extend federal emergency jobless benefits, harming tens of thousands of jobless workers in Wisconsin and the businesses that depend on them as customers. Since federal benefits were abruptly cut off at the end of 2013, 35,000 jobless workers in Wisconsin have been cut off or denied access to federal unemployment benefits so far.
A balanced budget amendment in the U.S. Constitution would result in much longer and deeper recessions and would cause unnecessary job losses. When the economy goes into a dive and people are without jobs, the need for food stamps, health insurance and unemployment insurance rise sharply. Since tax revenue typically falls as the need for those programs rises, a balanced budget would require cuts to these safety net programs and other areas of spending at the worst possible time.
Federal Lifeline for the Unemployed Ends Dec. 28th, but the Debate Will Continue
Federally funded unemployment insurance benefits, known as emergency unemployment compensation (EUC), will expire at the end of this week. However, the debate on this issue will continue into 2014, as Senate Democrats seek an opportunity to restore the EUC program. (See, for example, this article about Senator Reed’s proposal.)
Here are ten key things to know about the EUC program, which expires on December 28:
1) The maximum length of unemployment insurance benefits will immediately drop to the 26 weeks of state benefits, which is slightly less than half the current limit in Wisconsin of 54 weeks of combined state and federal benefits. (That has already been reduced from a maximum of 99 weeks during the worst of the recession.)