The bill in question is Assembly Bill 623, which is a
Under the bill, current state economic substance provisions would be repealed. Instead, the state would adopt, by reference to Section 7701 (o) of the Internal Revenue Code, federal economic substance provisions.There are also several other smaller provisions in this bill that are special-interest legislation intended to shelter other types of costs and transactions from taxes, as well as several items that lessen the chances of DOR getting back money as the result of a tax audit. The tax audit items are especially intriguing, since many of these same GOP legislators signed off on the 2015-17 budget, which counts on $113.5 million in increased tax collections resulting from…..DOR hiring more tax auditors (as noted at the bottom of Page 3 of this PDF).
The bill as written would only apply to transactions that have economic substance as it relates to the transaction’s federal tax effect. The Internal Revenue Code’s economic substance provisions do not apply to state tax effects. There are numerous ways in which taxpayers could structure transactions that would have no federal income tax effect and therefore not be subject to the federal economic substance doctrine, but which could significantly reduce the taxpayer’s income that is taxable to Wisconsin. The potential reduction in income and franchise tax revenue could reach $296 million [annually].
In addition to the large budget hole AB 623 would cause, Jon Peacock at the Wisconsin Budget Project has issues with the sneaky way this corporate tax cut bill was put together without the public being notified about it.
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 [Thursday]’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.Of course, that was probably the intent- to hide the bill as long as possible and then jam it through before too many people could speak up about it, and draw the attention of the press (Peacock’s article was the first I had heard of it, and I bet this post is the first time you’ve heard of it). This is the way the ALEC crew works, hiding as much as they can from the taxpayers that pay their salaries, while giving additional tax breaks to their cronies and campaign contributors.
For many different reasons, I find it distressing when legislators rush consideration of major pieces of legislation and minimize the opportunities for meaningful public involvement. AB 623 is one of numerous examples of how that can create problems. I’m sure I’m not the only person who would have liked to testify at the hearing if the public had been aware that a large tax cut was being considered and had such a huge price tag. (I heard about the fiscal estimate well after the hearing began and rushed up to the Capitol, but I got to the meeting just as it was ending.)
And look who one of the co-sponsors of this legislation is- State Rep. Dale (Koo-Koo) Kooyenga, seen earlier this week posing for holy pictures about how the State Legislature should allow time for budget motions to be made available to the public. Maybe Koo-Koo didn’t fully know what was in this corporate tax cut bill when he backed it, like he claims he didn’t know what was in the notorious 999 measure that tried to gut the state’s open records laws last Summer, and maybe it’s just bad luck that the bill fast-tracked for a hearing in less than a week, with most of the time in-between being the New Year’s holiday weekend.
Or maybe Kooyenga had a bit too much of the Holiday Cheer, like he was during the final debate over the state budget, and couldn't get in contact with the Assembly committee to tell them to delay the hearing.
That, or maybe Kooyenga is a two-faced sack of shit who wants to hide his corruption and fiscal illiteracy in hopes the public will buy his BS of “reformer,” and not boot him out of the Assembly this November. One of the two.
These are the types of bills we have to vigilant about in the coming months, because I think the Wisconsin GOP knows they have fallen out of favor with the public, and are going to try to do as much damage and crass giveaways to their allies as they can in the remainder of this session. That way, it becomes a lot harder for the Dems that replace them to fix all of the damage, and they get to blame the Dems for the rough adjustments and “higher” taxes that are going to have to have to clean up the GOP vandalism. And AB 623 is the type of budgetary bomb that would be right in line with the ALEC/ Grover Norquist strategy of FUBARing a functioning government, and increasing the cynicism that today’s GOP relies on to keep getting more votes than they deserve.