Taxes: Separating Fact from Fiction

Woman: “Did you know over the past 14 years state taxes have been reduced by more than fourteen billion dollars.”

Man: “Oh, that’s ridiculous. The state just increased taxes on my smokes.”

Woman: “Yes, but when you take that and other new taxes into account, we still have a $12 billion decrease in state taxes over the past fourteen years.”

Man: “No wonder our state doesn’t have money for roads or schools or firefighters.”

This ad won’t be running on a radio station near you any time soon. But the facts are real.

Representative Gary Sherman (D-Port Wing), who represents a large rural district like mine, wondered why the money for roads and school just wasn’t there. He did some research and what he found was striking.

“Over the course of 14 years,” Gary wrote, “from the 1995-97 biennium through the 2007-09 budget, taxes were reduced by over $14.4 billion dollars. Individual income taxes were cut by $13.65 billion and property taxes by $785 million. Although the legislature has increased some taxes, like the cigarette tax, the net reduction in taxes is over $12.44 billion.”

In just one year -1999- the Legislature passed tax cuts that resulted in a total decrease in state revenue of $6.24 billion.

The money we’ve spent on tax cuts – if we had it back – would amount to $3.6 billion in this budget. That number is just shy of the state’s estimates on lost revenue due to the recent down turn in the economy.

When it comes to taxes, most folks feel like the old farmer I talked with last week. “Don’t tax you. Don’t tax me. Tax the fellow behind the tree.”

A few weeks ago we passed a bill that did tax the fellow behind the tree. We passed something called ‘combined reporting’. Sometimes known as the ‘Las Vegas Loophole’, the plan doesn’t raise the tax rate at all. It simply says if you – large company – make money in Wisconsin you need to pay state taxes on that income. Hiding your company profits in an empty Las Vegas office won’t let you get away without paying your fair share.

One recent study found of the 4,237 companies doing business in Wisconsin with receipts over $100 million, only 56% paid ANY corporate income tax in our state.

When these very large companies do not pay their share for the services they use, we either pay more or we do with less.

The next few months you will hear much more about taxes. And the roads, schools and local services taxes buy.

Right now legislators are working to balance a state budget that is deep in the hole. This week the powerful Joint Finance Committee began state-wide public hearings to listen to citizen’s opinions about solving the state’s financial problems.

One thing I am sure we will hear is; “We need to run government like a business.”

When I consider the rising costs government faces to pave roads, take care of our elderly in the nursing home, heat the school or keep communities safe, I think no business would ever cut revenue in the face of rising costs.

And yet that is exactly what the state has done over the last fourteen years.