Wednesday, October 10, 2018

Even as dairy farms close and manufacturing jobs/wages lag, Walker still wants the Big Giveaway

Apparently our Fair Governor didn't need much time off of the campaign trail from the death of his father over the weekend, as I look at the news, and saw that Scott Walker told a friendly audience yesterday that he wanted to continue handing out “The Big Giveaway” – the Manufacturers and Agriculture tax credit.
"We don't want to go backwards," Walker told members of Wisconsin Manufacturers and Commerce at a luncheon in Madison. "About 88 percent of all the recipients ... are small businesses. Businesses that make less than $1 million a year. If we were to wipe that out, we would be taking out a lot of the growth and prosperity in the state."
Walker’s quoting this Legislative Fiscal Bureau memo from January that went over who receives the Manufacturers’ and Agriculture Credit, but he doesn’t mention a few things.

1. Is $1 million in sales/income really a “small business”? That sure seems out of touch with the reality of a lot people.

2. Walker may be conflating sales with profits. The 7.5% writeoff for the MAC seems to be based on gross sales (here’s the tax form, if you’re into that kind of thing), but the amount you get to write off is limited by the amount of Wisconsin corporate tax the business owes (corporate tax that is based on profit, not sales).

So if you don’t use the full 7.5% writeoff for the MAC in a given year, because your profits weren’t high enough, you can carry over whatever you didn’t use for up to 15 years. What a deal!

In addition, a second LFB memo shows that 78% of the MAC is used to write off individual income tax, which can already be reduced through itemized deductions and other incentives/shelters. Forgive me if I don’t find someone that makes up to $1 million in income a “small business person.”

And those points are small potatoes compared to the real crime about the MAC – it’s a clear handout to large corporations and the rich that funnels away a lot of our state’s potential resources. WPR’s Shawn Johnson dutifully noted another part of that LFB memo on the MAC - a part that Walker conveniently left out.
…that same memo showed that the wealthiest 12 percent of all recipients received roughly 73 percent of the payout, an amount that totaled $159 million in 2017.
That’s $159 million out of a total tax cut that exceeded $216 million in tax year 2017.

And the amount of the Big Giveaway keeps jumping each year. That second LFB memo from January has the latest estimates (note, this chart measures Fiscal Years that end on June 30 and include the “rollover” amounts, so the numbers for 2017 will be more than what was handed out under MAC for the entire tax year).


Now add in the GOP Tax Scam from DC which cut taxes even further for many of these corporations and business owners, and explain to me how many other tax breaks these folks need? Especially as our infrastructure falls apart due to the lack of revenue available to fix the roads and keep our schools funded.

And as I’ve mentioned several times, it’s not like this Giveaway has translated into any kind of additional job growth. As the MAC kept getting bigger in 2016 and 2017, job growth shrunk in the state, as shown by the “gold standard” Quarterly Census of Employment and Wages (QCEW).


In addition to the lack of job growth, the tax giveaways haven’t trickled down into better wages for Wisconsinites in manufacturing or agriculture. The most recent QCEW survey ranked Wisconsin 48th in the US for average weekly manufacturing wage growth , at 1.1%, and over the last 4 years, annual wage growth in that industry is a similarly-lame 1.8%. In addition, Wisconsin manufacturing wages are the worst in the Midwest, showing that WMCs CEOs are not using the credit to make us more competitive in attracting and retaining talent.

Average weekly manufacturing wage, March 2018
Ill. $1,583
Mich $1,414
Ind. $1,347
Minn $1,335
Ohio $1,239
Iowa $1,145
Wis. $1,144

As for agriculture, Western Wisconsin led the nation in farm bankruptcies in the second half of 2017. In addition 535 dairy farms have closed in Wisconsin 2018 through September, and more than 1,000 have folded since the end of 2016.

So when Scott Walker is saying “. If we were to wipe [MAC] out, we would be taking out a lot of the growth and prosperity in the state", who is he talking about? Oh that’s right. Walker was speaking to the oligarchs at the WMC luncheon, and that’s the ONLY prosperity he really cares about.

By comparison, Walker’s opponent has identified the Big Giveaway as a place to find funding for future investments, and his campaign restated that opposition in the WPR story from yesterday.
"Our economy might be helping corporate special interests and wealthy campaign donors, but it’s not working for Wisconsin families," said [Tony] Evers' Deputy Communications Director Britt Cudaback. "Tony believes Wisconsin’s tax structure should be fair, and that includes repealing the 'Man & Ag' corporate handout so we can instead prioritize helping hardworking families get ahead. It’s time for a change and an economy that works for all of us.
Evers is right. Give the WMC crowd the boot in November, and take the expensive, regressive and failing MAC with it.

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