First of all, the long-awaited 2016-17 final tax revenues were released on Friday, and it turns out there wasn’t much worthy of hiding, as the numbers virtually matched the Legislative Fiscal Bureau’s projections from January.
The final estimate of tax collections projected last January was $15,503.6 million. Actual collections were $14.0 million, or 0.1%, above the estimated amount.That’s nowhere near enough of a difference to assume any kind of notable change in the budget outlook, and the bigger effect will likely come from tax changes that are in the budget bill. That situation doesn’t look as good if you give any kind of a damn about fairness or the state's fiscal stability.
In looking through the 39-part tax omnibus that went through last week, I was trying to find any positives in the tax items that Joint Finance passed, and I came up with two things. The first was the removal of Walker’s stupid $1-a-week income tax cut, and a proposed sales tax holiday in August that would not have boosted the economy and likely been more trouble than it was worth for retailers to deal with. Those moves restored $225 million for use in other places.
Then there is one provision added by JFC that could actually help the state in our 21st Century economy, although it involves writing a check to companies by making a certain credit refundable.
Modify the nonrefundable research expense credits (including the engine and energy efficiency credits), as computed under current law, to be split into two components. Specify that one component of the research credit be a nonrefundable credit equal to 90% of the current credit amount, which could be claimed and used in the same manner as under current law. Specify that the other component of the credit be a refundable credit equal to 10% of the current credit amount. Specify that these provisions first apply to new research credit claims beginning in tax year 2018. Estimate increased used credits of $2.1 million in 2018-19, $7.5 million in 2019-20, and $9.0 million in 2020-21.
Otherwise, it’s a lot of giveaways to the rich, connected and corporate. The state’s Alternative Minimum Tax was repealed by Joint Finance, which is well-documented as a move that overwhelmingly helps the rich. In addition, businesses can now write off “machinery, tools, and patterns not including such items considered manufacturing property” from their property taxes, which will cost taxpayers $74 million next year.
There are also a number of special-interest giveaways, like one that allows construction companies to write off $2.5 million in sales taxes for building materials if they are working on a UW or Tech College building (the Fox-con has a similar exemption), small ones that allow beekeepers and people who sell fish to fish farms to avoid sales taxes, and this one for broadcasters.
Specify that, under laws governing the individual income tax and corporate income/franchise tax, a "broadcaster" means a television or radio station licensed by the Federal Communications Commission, a television or radio broadcast network, a cable television network, or a television distribution company, but does not include a cable service provider, a direct broadcast satellite system, or an internet content distributor. Specify that a broadcaster's gross receipts from advertising are in this state only if the advertiser's commercial domicile is in this state. Specify that a broadcaster's gross royalties and other gross receipts received for the use or license of intangible property are sales in this state only if the commercial domicile of the purchaser or licensee is in this state and the purchaser or licensee has a direct connection or relationship with the broadcaster pursuant to a contract under which the royalties or receipts are derived. Specify that these provisions do not apply to the gross receipts of members of a combined group that are not broadcastersGee, wonder if that might get these legislators some “nice coverage”, after the bosses know they have $16.2 million in writeoffs coming?
Specify that these provisions first apply to taxable years beginning on January 1, 2019. Estimate decreased general fund tax revenues of $3.2 million in 2018-19 and $13.0 million in 2019-20 and reduced segregated revenues from the economic development surcharge of $120,000 in 2018-19 and $470,000 in 2019-20. Increase estimated sum sufficient GPR expenditures in WEDC's operations and programs appropriation by $120,000 in 2018-19.
But look who DOESN’T get a tax break- low-income workers. The JFC Republicans even went against Governor Walker to cut out a proposed expansion of the state’s Earned Income Tax Credit.
Delete the modifications recommended by the Governor to: (a) increase the rate of the state EITC for families with one child (Alternative 4 in LFB Paper #287); (b) enhance the state EITC for claimants who become married (Alternative 3 in LFB Paper #288); (c) create a state EITC for noncustodial parents (Alternative 2 in LFB Paper #289); and (d) deny eligibility for the credit to claimants who have disqualified losses in excess of $15,000 (Alternative 2 in LFB Paper #290). In addition, decrease funding by $2,100,000 GPR in 2017-18 and increase funding by $450,000 GPR in 2018-19 to cover the cost of the credit under current law (Modification in LFB Paper #286).This knocks out $8.7 million in GPR in 2018-19 that would have been needed relief for the working poor. But priorities like dumping the AMT and personal property tax were considered more important by WisGOP.
I also notice that many of these tax breaks have larger price tags in 2019-20 and 2020-21, which means that the already $1 billion structural deficit in the General Fund will likely grow larger. Combined with an awful can-kicking job on Transportation that will multiply the state’s many potholes and funding issues on that side, and it’s pretty obvious that Wisconsin is looking at a horrid budget after the 2018 elections.
But that’s the way the ALEC-GOPs like it - pass special interest tax cuts first, get the campaign donations for 2018, then screw over the rest of the state with budget cuts and tax hikes on everyday people in 2019.
And it only ends when voters finally say “enough” and boot this crooked fiscal vandals out of power.