Jean-Francois Millet, The Gleaners, 1857
You can only reap what you sow and it looks like Governor Jim Doyle’ s reluctance to reap and sow may be leading Wisconsin to more hard times and lean years.
In a statement today reported by the Journal Sentinel, Governor Doyle indicated that in response to revenue shortfalls, a new proposal requiring 5% cuts in state aid to public schools and local governments is in the works (more here). These would be devastating to programs and services that are already strained.
He used the word “forced,” but in very similar terms to the Republicans, who in the last budget cycle, claimed to have been “forced” to cut aid when they were acting on their own volition, the “forcing” Doyle refers to is in fact a choice being made by the Governor himself.
As previously noted (here and here), there is much potential for Wisconsin to restructure our revenue choices to meet these shortfalls and move toward an equitable and sustainable tax structure.
The Institute for Wiscosin’s Future (IWF) put out a “cliff notes” one page version of the Catalog of Tax Reform Options for Wisconsin today . Here it is:
|
Tax Reform Option |
Taxpayers Affected |
Annual Fiscal Impact (FY2010-‘11) |
| INCOME TAX OPTIONS | ||
| Reinstate the estate tax with a $1 million exemption: When Wisconsin last had this, rates ranged from 0.8% to 16%, averaging 5%. Forty percent or more could be offset by a lower federal tax. | The estates of Wisconsin’s wealthiest—about 1% of those dying each year. Estates left to surviving spouses would not be taxed. | $21 million FY10; $85 million FY11 |
| Tax 100% of capital gains: Wisconsin now taxes only 40% of capital gains; Governor’s budget proposal would increase that to 60% | Investors who profit from sales of stocks, bonds, real estate and other assets. IRS says over 70% of capital gains go to persons with incomes above $100,000. | $170 million FY10; $192 million FY11 |
| Increase from 6.75% to 8.75% the income tax on taxable income above $300,000 for joint filers and $225,000 for single filers. Governor’s budget proposal would raise the rate to 7.75%. | High-income taxpayers. A couple with $400,000 taxable income would pay $2,000 more, some of that offset by lower federal taxes. | $362 million FY10; $272 million FY11 |
| SALES TAX OPTIONS | ||
| Extend the sales tax to personal services:
(Such as beauty, barber and other personal care; vets for pets; health clubs; admission to educational events/ places; dues to fraternal organizations; auto club fees; funerals. |
Primarily Wisconsin households, though businesses would pay a share. | $93 million FY10; $96 million FY11 |
| Increase the state sales tax rate from 5 cents per dollar to 6 cents | 82% of the increase would be paid by Wisconsin residents, 9% by state businesses and 9% by residents of other states. | $806 million FY10; $847 million FY11 |
Note: Fiscal impacts based on latest Department of Revenue and Legislative Fiscal Bureau estimates.
The IWF is also a co-sponsor of a press conference bringing people together to “Speak Up for a Budget the Puts People First” (click on the title for more information and a a flier). It is being held next Tuesday, May 19, at 9:30 AM in the State Senate Parlor. Be there if you can.
The ball is also in the Joint Finance Committee’s court. What ever Doyle proposes, they have a big say in the process. It is absolutely essential that they hear from constituents that new revenues are the only way we can sow for a bountiful future. The Committee is chaired by Madison’s Mark Pocan and Monona’s Mark Miller. All the contact info is here. They need to hear from you! A quick call, an email, anything.
The Journal Sentinel story also noted:
A 5% cut would cost schools about $258 million, although some of that could be offset by federal stimulus money (emphasis added).
Confusion still reigns on the stimulus funds. Two quick clarifications may help. First, the “flow through” money has already been earmarked to pay for a large chunk of the state’s share of the inadequate allowable revenue (the inadequate allowable revenue increases have been almost entirely shifted to property taxes). That horse has left the barn. Second, the general rule for the other stimulus money (Title I and IDEA) is to “supplement not supplant.” There are some loopholes, but they aren’t big enough to absorb this hit. In terms of general operating revenues, the stimulus has been basically spent already. Let’s stop pretending otherwise.
Come the the press conference. Get those notes and calls done. This is important.
Thomas J. Mertz
AMPS 