Friday, February 12, 2021

Evers wants to allow Sconnie communities to have local sales taxes. It is necessary and long overdue

I wondered if Governor Evers would try to free up Wisconsin’s local governments in the budget that comes out next week. And we found out today that he will.
Under the governor's plan, counties could increase the sales tax by 0.5% and municipalities with a population of more than 30,000 could do the same. Voters would have to approve any increase in a referendum.

Currently, Wisconsin imposes a 5% sales tax and almost all counties impose a 0.5% sales tax. That means the sales tax is 5.5% in most parts of the state — low compared to many parts of the country.

Evers would allow the rate to go up to 6.5% in places where voters approved the maximum increases at both the municipal and county levels. In a few spots, it could go even higher because existing law allows communities that are tourist attractions, such as Wisconsin Dells and Eagle River, to levy additional sales taxes.
I am all for this. Local communities have been held back for years by a failing system that relies far too much on shared revenues coming down from Madison, and on property taxes as the main method of raising funds.

Wisconsin traditionally has kept its sales taxes down, and relied on income taxes (at the state level) and property taxes (at the local level) to fund government. The idea was that the state would pass down shared revenues at a sufficient level that locals could fund their services at a sufficient level, but the state has consistently shared less of its revenue over the last 20+ years.
At the same time, Republicans at the state level limited local governments in how much they could raise the property tax to keep their services functioning, and locals have been prevented from having any sales tax beyond one at the county level (other than the handful of small, touristy communities that can levy a premier resort tax).

One of the few ways that the locals could get money in to fix their roads and release pressure off of the property tax was to institute local vehicle registration fees. As the Wisconsin Policy Forum noted in its state-local tax report, the previously rare “wheel tax” became widespread in the state during the Age of Fitzwalkerstan.
That’s $39 million in registration fees that Wisconsinites weren’t paying a decade ago, and it’s only paid by people that live in that community.

Likewise, property taxes are also paid by residents, but not tourists visiting these communities and using a town's amenities. Even worse, many Wisconsinites can’t even write off those property taxes due to the GOP’s 2017 Tax Scam, which put limits on how many state and local taxes (SALT) that could be deducted.

A local sales tax is something that the City of Milwaukee has long asked for, given that it's Wisconsin's Number 1 destination of tourism dollars and has been especially short=handed by the state's shared revenue formula in recent years. There was even a hearing on a bill in the first week of March to allow a referendum to come before voters... and then COVID shutdowns started the next week (the Assembly had already adjourned anyway).

If you look at the Wheeler Report, take a look at the wide range of organizations in Wisconsin's largest city and county that backed Evers' move, along with the statewide organizations that represent local government.
Also note that the one opponent are the oligarchs at Wisconsin Manufacturers and Commerce, who would love nothing more than for local governments to break down and have to sell off their services to corporations. It also makes me wonder which direction GOPs decide to take on this local sales tax proposal, especially the several GOPs whose seats are gerrymandered into Milwaukee County.

To me, this is a reform that is long overdue, and I am glad to see Evers bring it up. If he’s smart, he ties it to some kind of property tax reduction/restriction over the next couple of years (and maybe a moratorium on new wheel taxes), and dares the GOP to take it out. It’s well past time Wisconsin make real steps to end their 20th Century local funding system, and freeing up local communities to make tourists and others spending discretionary income to pay more for the services that they are already using.

It also seems like a smart time to shift away from the property tax in a time when they are threatening to sizably jump in 2022, without the benefit of allowing many Wisconsinites to write them off on their federal income taxes. It also allows a better chance to keep everyday operations running smoothly in our communities, because there is no more of this Koched-up austerity imposed on them.

Which is especially handy in a time when it seems that social needs continue to grow, due to the inequality of our current economy. The Feds and the state are only going to be able to do so much, and want to give out so much to local communities after the COVCID World ends. Better to unlock the handcuffs and give them more options now.

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