Sunday, February 14, 2010

More Corporate Tax Evasion

Edward Lump [what a fitting name], president and CEO of the Wisconsin Restaurant Association, in a recent Journal Sentinel article, rants against a proposed Wisconsin bill which he feels will threaten small business.

He throws out some small business stats, regurgitating the discredited idea whereby small business will save the day. "Small business employs more than 53% of Wisconsin's workforce and creates 75% of new jobs nationally," Lump claims without reference.

And then there is this dubious and confused claim, "Now more than ever, Wisconsin needs government that recognizes small business is a vital part of the local economy, not a bank from which it can withdraw seemingly endless funds. Instead of creating new taxes, shouldn't we look for ways to cut taxes so businesses can add jobs?"

Wisconsin government doesn't recognize the importance of small business? Where's the proof for this claim? Because small businesses are required to pay taxes, that supports the notion that Wisconsin doesn't appreciate small businesses role in our economy? Even if we cut taxes and save a small business, let's say, $5,000-annually, does Mr. Lump think that would really ignite a hiring flurry?

If that were the case, we'd never have recessions, nor would we ever experience anything other than full employment...since we've been cutting taxes since the '80s. Shouldn't the miracle market, combined with the elimination of so much taxation, have produced a Utopian wonderland by now?

But we know this 'full employment, stable economy' scenario has not been the result of the tax cut frenzy we've seen over the past few decades. So how can these hucksters, with a straight face, always claim cutting taxes is the answer.

Now we get to the bill - Assembly Bill 215 - which has made Mr. Lump so limp. The bill regards the valuation of billboards for assessment purposes and property taxation. Lump sees this as a threat to all small businesses. That's quite the leap of paranoid irrationality. [I found it very odd there were no citations nor even the name of the bill Mr. Lump finds so vexing in his article. But then one would be able to go read the bill and see the tenuousness of Mr. Lump's claims...and there would be no reason to print his article.]

He completely leaves out an explanation as to why valuation of billboards is an issue. He doesn't mention that if billboard owners pay their fair share of taxes on their property, the rest of us pay a little less. And, somehow, "There is nothing that would prevent cities from applying the same rules to other small businesses, such as restaurants."

The bill applies to, "...permits issued, leasehold interests, or other intangibles with regard to the outdoor off−premises advertising sign. In this subsection, “off−premises advertising sign” means a sign that does not advertise the business or activity that occurs on the site where the sign is located."

The State already has the ability to tax. If they wanted to tax restaurants more, they would. To paint this legislation as some type of nefarious, backdoor bill aimed at (in a very roundabout way) a tax increase on all businesses is fantasy. Again, if the state wanted to increase taxes on business they could. They wouldn't want the arduous legal battles involved in such assembly bills just for the fun of it.

To support his paranoia, Lump equates billboard valuation with valuing liquor and hunting licenses. He sarcastically squawks, "How would the value of a liquor license be determined? Would the assessment take into account the myriad variables that affect the profitability of a licensed establishment, or would it be one-size-fits-all? ... Think about how ridiculous it would be for the state to tax you on the "value" of your hunting permit...Or on the "value" of the deer you could potentially take home, whether you actually get a deer or not. Who knows what other licenses cities will decide to tax, once the state gives them this power?"

A billboard's value is in the income stream it can generate by exposing whatever it's advertising to more and more people. The reason for the bill - more specific legal language to capture the true value of billboards - is because they are quite different from the much simpler licenses Mr. Lump incorrectly, and purposefully misleadingly, tries to compare them to.

A hunting license doesn't produce an income stream to it's holder. It allows them to shoot a deer (catch a fish, etc.). A liquor license allows its holder to ship, manufacture, and import liquor. The hunter will pay taxes when he has the butcher process his deer. The liquor will be taxed when it is sold. These are direct links along the chain of commerce for these two examples which can be traced and taxed accordingly. When Clear Channel, CBS Outdoor, or Lamar (a few of the largest billboard companies) obtain an outdoor advertising permit for $175, this cost nowhere near reflects the income stream these companies expect to profit from such advertising.

As Dennis Hathaway comments at the Scenic America Blog, "The billboard companies fight tooth and nail against tax assessments that account for the value of anything other than the structure itself, but if one of their billboards has to be removed for a highway widening or other public works project, they will seek millions in compensation based on the value of the sign as a 'revenue' generator. This is a classic case of wanting it both ways, and hopefully governments will point that out in defending against these inevitable lawsuits."

And, maybe both of the fees on hunting and liquor licenses are too cheap, also. Granted, there is a point where costs become too prohibitive and potential users will stop buying the licenses. With the current value of billboards abysmally low (compared to their true market value), we're nowhere near the tipping point. Even with an increase in the taxes billboard owners will pay, not one of them will stop advertising on billboards...because they are all making more than enough money to justify the cost.

Just shut up and pay your fair share in taxes. So residents, workers, home-owners, and those not as fortunate can pay less.

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