DOR Says Proposed Business Tax Cuts Could Cost $384 Million per Year
Legislators learned today that new corporate tax cut legislation “could reduce revenue by approximately $335 million to $384 million annually.” That news was contained in the Department of Revenue (DOR) fiscal estimate that was distributed this morning to members of the Assembly Ways and Means Committee half an hour before a public hearing on the bill.
The Assembly version of the bill is AB 623 and was introduced last week on December 29th. Early this week the chairperson of the Ways and Means Committee amended the agenda for today’s public hearing to add the new bill. The quick scheduling suggested that the bill might be on a fast track, and perhaps that will still be the case; however, the DOR fiscal estimate is likely to complicate any plans to rush the bill to the floor of the Assembly or Senate. Read more
Good Jobs First (GJF) announced today that Wisconsin taxpayers can now access nine years of economic development subsidy data in the organization’s searchable Subsidy Tracker database. The enhanced and expanded database developed by GJF now includes information about nearly 2,200 state and local subsidies for businesses in Wisconsin, totaling more than $1.8 billion.
The updated database adds nearly 30,000 new entries across the U.S. from 160 state and local programs, and 138 federal ones. Access to the database is free and unrestricted at: goodjobsfirst.org/subsidy-tracker. Read more
An uncapped Wisconsin corporate tax credit is expected to balloon to $279 million in the next fiscal year, more than twice the original cost projection.
There’s been a lot of talk in Wisconsin over the last couple of weeks about the need to ensure that tax breaks and loans awarded by Wisconsin’s economic development agency are limited to businesses that are creating jobs and fulfill their job growth commitments. Yet almost no attention has been paid to the fact that the state’s largest tax credit for corporations is ballooning in cost and is distributed to businesses operating in Wisconsin regardless of whether they are expanding or slashing their workforce in our state. Read more
Legislators Can Avoid Deep Cuts without Raising Taxes
Wisconsin needs a budget that invests in the building blocks of a strong economy. Healthy families, safe and stable communities, and a well-educated workforce are assets critical to helping Wisconsin remain an attractive place to live, raise families, and do business. By strengthening these resources, the state budget can lay the groundwork for broad-based prosperity and an economy that works for everyone.
Unfortunately, the budget proposed by the Governor makes deep and unnecessary cuts to investments vital to Wisconsin’s long-term economic success. For example, the proposed budget would reduce resources for public education – a cut that would come on top of dramatic reductions in resources that have already occurred. The budget would also make deep cuts in state support for the University of Wisconsin System, giving a tremendous blow to one of the engines of Wisconsin’s long-term prosperity. The proposed budget would also make it harder for people with disabilities to get the help they need to contribute to their communities. Read more
A tax cut that nearly wipes out income taxes for manufacturers is now expected to cost the state more than twice the original estimate, and has reduced resources for Wisconsin’s public schools and university system.
Conservatives Critique “Tax Cronyism,” and Progressives Critique the ALEC Report
I was pleasantly surprised to learn recently that the American Legislative Exchange Council (ALEC) has issued a report calling on policymakers to end the wasteful subsidies given to corporations by state and local governments. Their report titled The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth criticizes special tax breaks for certain companies, which it points out tend to increase the tax burden on other companies and put them at a competitive disadvantage.
Corporations are very good at extorting costly subsidies from state and local officials, but some of those corporations and a growing number of policymakers are realizing that these incentives aren’t an effective way to promote economic growth. As WCCF intern Jelicia Diggs wrote in a recent WI Budget Project blog post, a number of businesses in the Kansas City area have prevailed on Missouri legislators to call a ceasefire to the use of incentives for pirating corporations across the border with Kansas. Read more
Figures released Friday by the Department of Revenue indicate that state tax collections were 21% lower in April than in the same month of 2013 – primarily because of a $332 million drop in individual income tax revenue. Perhaps more importantly, tax collections have been falling for the past several months – to the point that total tax revenue over the first 10 months of the current fiscal year is now a little bit (0.2%) below the total at this point of the previous fiscal year.
Of course, part of the sharp decline in April can be attributed to income tax cuts that took effect at the beginning of tax year 2014, and part is the result of reductions in income tax withholding that took effect on April 1. Those variables and others make it difficult to do the number crunching to assess whether the latest drop in tax collections is cause for alarm – especially on a gorgeous Friday afternoon when I’m anxious to get out of the office and start the holiday weekend. Read more
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
A number of large, profitable corporations in Wisconsin pay little or nothing in state corporate income tax, according to a new report. Loopholes, tax credits, and creating accounting keep the amount these corporations pay in income tax to a minimum.