As you’ve probably heard or read by now, Wisconsin got some bad news today regarding state tax collections – which are now expected to be $158 million less than previously expected during the 2015-17 biennium. But the good news is that some other re-estimates partially offset the revenue loss, bringing the net change to the 2015-17 budget to -$94 million (compared to the previous estimate), and the state’s reserves can absorb that hit.
The bottom line is that the state is now expected to finish this biennium with a “net balance” in the general fund of $70.2 million, instead of the $164.5 million net balance that had been estimated a few months ago. The key lesson to be drawn from the numbers released today by the Legislative Fiscal Bureau (LFB) is that tax collections and other revenue can be volatile and are difficult to predict, so it’s important to build a sizeable “ending balance” or budget cushion into each budget. Read more
Transportation Tax Increase Shouldn’t Be Biased against Low-income Wisconsinites
Proposed legislation to fix local road repairs is a bad deal for poor Wisconsinites who don’t have cars. The proposal would authorize a sales tax increase that would fall more heavily on poorer Wisconsinites because the sales tax takes a higher percentage of their income. What makes that particularly inequitable is that the bill precludes using any of the new revenue for transit (e.g. bus and van service). Read more
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
December 16, 2015: This blog post is revised to compensate for an error in figures from the U.S. Census Bureau that overstated the amount of tax Wisconsin residents pay.
Wisconsin is near average in many measures of government revenue and spending, according to new figures for 2013 that were released by the U.S. Census Bureau this week. That’s nothing new, as Wisconsin has been near the middle of the pack for about a decade now.
- Wisconsin state and local governments ranked 22nd among the states in the amount of taxes, fees, and other charges that they collect from state residents on a per-person basis, and 21st when that amount is measured as a share of personal income.
- Wisconsin ranks 25th in total government spending per person and also 25th when the amount is measured as a share of income.
Wisconsin lawmakers have passed tax cuts totaling $4.8 billion over six years, according to a new legislative memo released this week. These tax cuts have done little to boost job growth and have forced damaging cuts to Wisconsin’s public schools, universities, and health care system.
Lawmakers have passed dozens of tax cuts since January 2011, including millions of dollars in tax cuts that primarily benefit people with high incomes. And lawmakers aren’t slowing down – the total value of tax cuts has increased each year since fiscal year 2012, and is slated to go even higher, to nearly $1.7 billion per year in the two-year budget period that starts in July 2017.
Among the tax cuts passed since January 2011, according to the memo:
- A 2013 income tax rate reduction that gave an average tax cut of $1,440 to taxpayers earning over $300,000 but an average of just $86 for taxpayers who earn under $100,000.
If you look at a new memo from the Legislative Fiscal Bureau (LFB) that itemizes the tax and fee changes in the biennial budget bill, you wouldn’t know that the net effect of the bill is to cut taxes. The fact that the budget bill does cut taxes isn’t obvious in the latest LFB document for a couple of reasons:
- First, the LFB memo summarizes the state-level tax changes and doesn’t examine the reductions in local property taxes that result from increases in state spending for property tax relief and restrictions on local spending.
- Second, the bill uses short-term tax increases to provide a temporary offset to larger long-term tax cuts (and the latter are beyond the two-year time horizon of the LFB analysis).
Under Proposal to Eliminate the Alternative Minimum Tax, Only Highest Earners Would Receive a Significant Tax Cut
Lawmakers have proposed eliminating Wisconsin’s Alternative Minimum Tax, a change that would give a tax cut to some people with high incomes and exclude nearly all taxpayers with incomes under $100,000. The legislature’s budget committee is likely to vote on the proposal next week. Read more
One of the positive aspects of the Governor’s budget proposals is an investment in Department of Revenue positions to increase tax compliance and improve collection of state and local debts. But despite the fact that those additional positions will yield a tremendous return on the investment, some conservative legislators have balked at providing more staff for DOR. The issue may be debated in the Joint Finance Committee (JFC) this Thursday or Friday, May 29 or 30. (Update: JFC consideration of the DOR issues have been postponed until June 2.) Read more
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