Letter Enumerates Unintended Consequences of Proposed Constitutional Constraint on Taxes

Sunday, February 16, 2014 at 7:31 PM by

A broad range of groups sent a letter to state Senators last Thursday in opposition to Assembly Joint Resolution 79, which would require a supermajority vote for legislators to approve certain tax rate increases.  The letter, which was signed by 20 organizations, asks Senators “not to tie the hands of future lawmakers by putting a supermajority requirement into the state constitution.”  

AJR 79 was approved last week by the Assembly on a straight party-line vote.  It would apply to three tax rates: the individual income tax, the corporate income tax, and the sales tax.  In contrast to increases in the gas tax and tobacco taxes, which wouldn’t be affected by the proposed amendment, none of the three tax rates that the resolution applies to have increased more than once in the last 28 years. 

The letter points out that even though those three tax rates are rarely increased, the proposed constitutional change could have a number of unintended consequences:

“For example, it could have the effect of increasing property taxes by limiting the state’s ability to appropriate funding for property tax relief.  It could also put upward pressure on other sorts of state taxes and fees, such as excise taxes and college tuition.”

Another potential effect of a constitutional supermajority requirement noted in the letter is that it could hurt Wisconsin’s bond rating: 

“…Moody’s Investors Service specifically cited the supermajority restrictions in Nevada and Arizona as reasons for downgrading the bond ratings in those states.  Hurting Wisconsin’s credit worthiness could cause a very substantial increase in borrowing costs for highways and other capital improvements.”

The communication to Senators also points out that the proposed constitutional change is likely to impede the ability of lawmakers to pass tax reform legislation that increases some rates in order to offset decreases in others.  The letter concludes that “it would be short-sighted to constitutionally restrict the options of future lawmakers for balancing the state budget.” 

The following groups signed the letter:

  • Wisconsin Council on Children and Families
  • Wisconsin Council of Churches
  • WISDOM
  • Wisconsin Education Association Council
  • End Domestic Abuse Wisconsin
  • Mental Health America of Wisconsin
  • League of Women Voters Wisconsin
  • Coalition of Wisconsin Aging Groups
  • Wisconsin Alliance for Retired Americans
  • Institute for Wisconsin’s Future
  • Citizen Action of Wisconsin
  • Community Advocates Public Policy Institute
  • One Wisconsin Now
  • Madison Institute
  • National Association of Social Workers – Wisconsin Chapter
  • Wisconsin Community Action Program Association
  • AFSCME Councils 24, 40 and 48
  • Wisconsin Farmers Union

If the Senate votes for AJR 79, it will need to approved again by the legislature in the 2015-16 session and then approved in a public referendum.  You can find the full letter here

Jon Peacock

Categories: Blog, constitution, income taxes, sales tax, STATE TAXES | Comments Off on Letter Enumerates Unintended Consequences of Proposed Constitutional Constraint on Taxes

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