Shelter-In-Place Reading

Coronavirus Bailouts Shouldn’t Reward Investors And CEOs, Democrats Say

Coronavirus Tracker

‘So tired of the rich profiting from every cataclysm’

Social Insurance in a Time of Pandemic

Visualizing the History of Pandemics

A Complete List of Trump’s Attempts to Play Down Coronavirus

Trump’s Company Paid Bribes to Reduce Property Taxes, Assessors Say

America’s Fox News Problem

Why the US Sucks at Building Public Transit

11 charts that explain the coronavirus pandemic

The Coronavirus Called America’s Bluff

Now Is the Time to Overreact

The Shopko Swindle — rewarding wealth instead of hard work

On Fox News, suddenly a very different tune about the coronavirus

Sen. Ron Johnson: We Shouldn’t Shut Down Economy Just Cause Up to 3.4 Percent of Infected Population Could Die

Trump’s $1 trillion stimulus is a gamble for reelection — and a sea change for Republicans once opposed to bailouts

Republicans suddenly find a bailout they can back

Rachel Maddow Names And Shames The 7 States Not 'Doing Much At All' About Coronavirus

Four senators sold stocks before coronavirus threat crashed market

Wisconsin Now the Reddest State?

Wisconsin Taxes

[source]

Weekend Reading

Voter Impersonations Very Rare, Studies Show
Property Taxes Increase Under Walker
Support For Kavanaugh Pattern Of Ron Johnson's Horrendous Record On Issues Of Sexual Assault, Sexual Harassment
Rewarding Corporations That Cut Jobs
How Liberals Could Declare War On Brett Kavanaugh's Supreme Court
Donald Trump And The Self-Made Sham
This Is How The Rich Steal From America
Milwaukee County Leaders Say They Will Seek A Fair Share Of State Tax Revenues
Lindsey Graham's Old Comments About Merrick Garland Come Back To Haunt Him
Wisconsin DOT Knowingly Paid Twice On Stretch Of Roadwork For Zoo Interchange
A Stats-Based Look Behind The Venture Capital Curtain

Weekend Reading

The Myth That Markets Get Prices Right Won't Die
Who Creates A Nation's Economic Value?
Donald Trump And The Next Big Crash
Kansas Rancher Explains How Trump Has Betrayed US Farmers
Michael Cohen Case Shines Light On Sean Hannity's Property Empire
The Dumb Money
Smearing Robert Mueller
A Critical Look At Suburban Triumphalism
Richard Florida Can't Let Go Of His Creative Class Theory. His Reputation Depends On It.
The GOP Has Become The Caricature The Left Always Said It Was
Trump's Company Is Suing Towns Across The Country To Get Breaks On Taxes
The Oil Pipelines Putting The Great Lakes At Risk
The War On Pensions Continues
Where The Great Lakes Compact Ends And Wisconsin Law Begins
Hidden Figures: How Donald Trump Is Rigging The Census

Weekend Reading

Trump Again Sues Over Property Tax Bill For Jupiter Golf Course
The U.S. Can No Longer Hide From Its Deep Poverty Problem
Good News: Wages Are Up
Experts Say This Is The Ideal Retirement Savings Timeline
The U.S. Drops Out Of The Top 10 In Innovation Ranking
The Right Question About Inequality And Growth
A New Map For America
An Unwelcome Tax Surprise Could Soon Lurk In Your Paycheck
Big Money Rules
President Trump's First Year, In 14 Metrics
Kansas Provides Compelling Evidence Of Failure Of "Supply-Side" Tax Cuts

Sunday Reading

Want To See How America Is Changing? Property Taxes Hold The Answer
The Failed Promise Of Miller Park
Paul Krugman Gets Retail Wrong: They Are Not Very Good Jobs
United Isn't The Reason Air Travel Is So Miserable
Where Is The World's Most Sprawling City?
Growing Life Span Inequality Has Given The Rich An Extra $130,000 In Government Benefits
The Retail Apocalypse Is Suburban
Florida's Go-To Stadium Economist Is A Hack, A Shill, And Also Not An Economist
Climate Change Is Altering The Environment In Ways That Increase The Potential For Viruses Like Zika
11 Charts That Show Marijuana Has Truly Gone Mainstream
CEO Pay Is Out Of Control. Here's How To Rain It In

Weekend Reading

Tim Cook's Disingenuous Argument to Justify Apple's $215 Billion Offshore Cash Hoard
Ronald Reagan Wasn't A Ponzi Schemer
Suburbs Trying To Attract Millennials Diverge on Development Patterns
The Sinister Side of Cash
Media Loves Doomsday Stories About the West's Water Crisis. Here's What They Miss
The Freedom Lover's Case for the Welfare State
How to Learn to Love Maths
Undervalued Properties Deprive Schools of Millions in Funds
Life got better for pretty much everyone under Obama

The Economic Recovery Hasn’t Reached America’s Schools

Wisconsin Reading

The Property Tax Scam for Brewers, Bucks
Beloit Billionaire Posts String of Zeros On State Returns
State Continues to Lag Behind Nation in Job Creation
Ballpark Commons Could Get $26 Million in City Funds, Study Suggests
The Radical State Supreme Court?
Wisconsin No Longer Has Electoral Competition

About Meijer Grocery Coming To Wisconsin...

Think you'll be saving money by shopping at Meijer? Think again.

Here we have yet another large corporation using their boardroom of lawyers to lower their property taxes...which means you'll be paying more.

In a long-building tax avoidance scheme, big businesses and their lawyers, with the help of malleable appraisers and tax representatives, are turning the appraisal profession on its head.

Some basic economic principles are imbued in property appraisal. Substitution is the idea that a comparable must not only be similar physically, but also economically (similar rents, expenses, etc.).

Typically the details and length of the lease are common factors a buyer would consider when contemplating the purchase of an income-producing property. The appraisal profession typically considers the rents a property can charge an outcome of the location - the land. Now, according to the lawyers, the value is due to goodwill and other intangibles...and, conveniently, most of these aren't taxable.

Take Walgreens, a court recently ruled that sales of Walgreens weren't good comparables or good indicators of value for ... Walgreens. Typical retail, a closed Blockbuster store, and mom-and-pop stores were deemed more comparable.

The City of Milwaukee recently settled a property tax dispute, dating back to 2010, with Walgreens, on 18 of their stores. The settlement was for $3.7 million dollars.

Opinions in the Milwaukee Journal Sentinel on the topic (incorrect grammar and all) were things like: "Is it any wonder why citizens and businesses want to get out of the City?" or "This should be good news for mayor Berrett now he has another excuse for not fixing the pot holes on almost every street in the city. Waite for him to try increasing the wheel tax again. Which reminds me is he spending any of the wheel tax money on streets."

So, giving a business a refund of $3.7 million is a reason for a business to go away? Not to mention, the $3.7 million Walgreens is not paying, now has to be paid by other citizens. When corporations avoid paying their fair share, everyone else has to pick up the slack.

Much of what this case hinges on is that fact that Walgreens claim the leases they have are not market rate and actual sales of other Walgreens are also not comparable market transactions.

On the transfer returns (which names the buyer and seller; and separates real estate, equipment and business value) for the Walgreens sales, the Property owners claimed the total sale prices were for the real estate. Plus, in their actual leases on these properties, they specifically state these are real leases and not financing instruments. [Transfer returns and court transcripts, which contain this, are public information.]

Yet, in court they have claimed just the opposite. And the judge agreed in a City of Madison v. Walgreens court case. Although, if we're going to accept these revelations as true, this means that Walgreens has submitted falsified transfer returns and entered into bogus contractual leases.

Much of how a property's value is declared is based on accounting - wherever they can shift the supposed value to lower their taxes the most (based on things like depreciation, etc.), that's where they'll enter it in the ledger. A Walgreens is built to be a Walgreens, nothing else. Just as other special purpose properties (like gas stations, car washes, etc.) are built for a specific use. The builder/owner does this because they expect a certain return on their investment at that specific site.

Walgreens feels more appropriate comparable properties, to establish the value of their properties, are vacant buildings and and other neighborhood establishments.

This is like saying to find out what my Chevy Camaro is worth I should look at what Ford Taurus' are selling for. They're both cars, right?

The court completely ignores the concept of substitution. A property is only comparable if a buyer would actually consider it as an alternative investment. A vacant store does not have the same marketability and value as a store with a 25-year lease.

If a current owner of a Walgreens store were to sell, he/she would base the sales price on what the income stream is worth - how much he/she gets from the leases. Which is why most Walgreens sell at twice what Walgreens are claiming they are worth in court.

This whole fiasco ignores the general market that is the triple-net lease, investment grade properties. These are properties under long-term leases (usually 25 years) where the tenants pay the expenses. Thus vacancy (a typical deduction from the cash flow) is non-existent for the property owner. And, expenses are minimal to non-existent since they are the responsibility of the tenant. For these reasons, the standard Walgreens drug store sells for $467 per square foot at a 5.6% capitalization rate. The minimum typical footprint of a Walgreens is 12,000 square feet; this equates to a $5,604,000 value (or a rental rate of roughly $26 per square foot).

Even though the market evidence indicates this is what typical investors buy and sell these properties for, Walgreens astonishingly claims the stores are only worth half that.

All of these factors corroborated the City's assessments on the Walgreens' properties. Yet, for some inexplicable reason, the judge bought Walgreens' self-interested and contradictory argument and decided rather than comparing apples to apples, one should compare apples and rotten apples. And, because of this, my fellow taxpayers, you will pay more since Walgreens is paying less.

And taxpayers should be upset over this (and start complaining to their city attorney office to fight back against this shakedown) because the ambulance-chasing lawyers tax representatives are trying to use these same arguments all over the country on restaurants, big box stores and a whole host of other properties. Which means, in the next few years, residential home owners will be paying a lot more, while commercial property owners will laughing all the way to the bank.

And, for big boxes (like Meijer, Target, Walmart, Lowes), some courts have decided the best comparable indicators of value are vacant, or "dark", stores. Somehow, a building that is closed and out of business is a viable alternative investment to an successfully operating one.

Olivia LaVecchia has more of the gruesome details:

Figuring out the value of a property can be a complicated business. In Michigan, town and county assessors typically use a property’s construction costs, minus depreciation, as a primary metric to determine its fair market value; taxable value is half that amount. Property owners sometimes prefer, instead, to use the sale prices of comparable properties. This was the approach that Lowe’s took—with a catch. Lowe’s looked at the definition of the word “comparable,” and decided to stretch it. It said that, because big-box stores are designed to be functionally obsolescent, comparable stores are those that have been closed and are sitting empty—the “dark stores” behind this method’s name... 

It’s an established part of the big-box retail model that the boxes themselves be custom-built, cheaply constructed, and disposable. If retailers decide that they need a bigger space, it’s cheaper for them to leave the old one behind and build a new one. When Walmart, for instance, opened its wave of new, twice-the-size Supercenters across the country in 2007, it left hundreds of vacant stores behind it. This means that new, successful stores like the Marquette Lowe’s are rarely the locations that are up for sale, and that when big-box stores do come on the market, it’s because they’ve already failed or been abandoned by the retailer that built them. In other words, Lowe’s was saying, it had built a property that, despite generating roughly $30 million in annual sales for the company, had very little value, and because of that, it should get a break in its property taxes... 

Despite all of this, cities and towns continue to buy into the myth, sold to them by the mega-retailers themselves, that big-box stores spark economic development. In service of this myth, local and state governments across the country have granted at least $2.6 billion in subsidies to just six large retailers, including $160 million to Walmart and $138 million to Lowe’s, according to another study from Good Jobs First.

When these businesses use their clout to avoid taxation, all other taxpayers pay more.

For Further Reading:
For Cities, Big Box Stores Are Becoming Even More Of A Terrible Deal
Multibillion dollar Meijer, Inc. finds another way to screw Michigan cities and kids

Meijer tax ruling may reverberate statewide

Unfair Comparisons? Meijer, other big-box retailers use ‘dark store’ loophole to cut their Michigan property tax bills

Meijer Stores LP v Marion County Assessor

Big box stores ringing up property tax discounts

For Cities, Big-Box Stores Are Becoming Even More of a Terrible Deal

Are big-box retailers getting a tax break at schools’ expense?

'Dark store' theory benefits Meijer, other big retailers

Tax Evasion

James Rowen writes about the reclassification of the Pabst Farms' land to an agricultural designation.

Another great example of why everyday home owners pay more in property taxes than they should. (And, another great example of how the well-connected screw us over all the time.)

This was supposedly a win-win, no-brainer development. Of course we needed highway widening, an interchange, and a mall complex. You just can't have enough of that kind of stuff.

But now that the reality has set in (after taxpayers have funded the interchange infrastructure) that we don't really need this development. The developers are now claiming it's just farmland. Which, of course, they are only doing because agricultural land is taxed at half the normal rate. And, of course, the taxing entity is allowing this tax evasion because, as we all know, we must do all we can to aid business.

This property was so dynamic that a TIF needed to be created and taxpayers had to improve the access to the site (with the interchange) of this capitalist paradise.

We keep hearing about how we - everyday workers and taxpayers - have to help business and make things easier for them. We must improve the business climate for these very smart and very serious people. We need to follow the developers, financiers, and investors orders. They know what they are doing. After all, they're disciples of the magic free market. (Free for them, but you need to fork over your tax dollars. Similar to "free" trade.)

I'm all for tax dollars trying to revitalize the most downtrodden areas of our cities and our society. Using our collective action (and dollars) to bring up the least amongst us. Instead, over the past few decades, Republicans have told us to forget about the poor. The way to live the American dream is to deregulate business, give them tax breaks, and help them pay for the costs of their business and its necessary infrastructure. (Even though they don't want to pay taxes to help pay for the infrastructure that allows their business to operate - roads, sewers, plowing, etc.)

Now we have a socialism for the rich. Or, as they like to call it, the "free" market economy. Taxpayers provide low interest loans (through bonding), TIFs, highway and interchange construction (along with the necessary sewer and electric, not to mention the added police and fire protection), parking structures, tax credits, tax breaks, grants, and a whole litany of other giveaways. And who garners the majority of the rewards? They do. Ah, but guess who gets to cover any losses? You (the taxpayer) do, silly.

The 'free-market, business-climate, anti-regulation' emperor has no clothes.

Unnecessary Exemptions

Think your property taxes are too high? The Institute For Wisconsin's Future has a new report detailing many exemptions we could discontinue which would lower the burden for most home owners.

Hoisted By Your Own Petard

Scott Walker loves to repeat his "I've held property taxes low" talking-point as some sort of validation and/or credibility for his (allegedly) superior vision and management skills. The County portion of property taxes were down 0.6 percent last year. The City's portion was down 2.5 percent, while the State was down 7.4 percent.

So, using Scott Walker's own logic, Governor Doyle and Mayor Barrett have an even better vision and even better management skills.

Midweek Reading

Are Low Taxes Exacerbating The Recession?
Developers Getting Tax Breaks On "Agricultural" Land
Gas Taxes Give Us Break At The Pump
Scott Walker Rushes Release Of Plan To Keep Pace With Tom Barrett
Tax Fraud
Three Biggest Lies About The Economy

Oblique Journalism

The Journal Sentinel has an inanely meandering editorial - Not a tax hell, but state still needs better revenue mix - pushing for decreased taxes, service maintenance, alongside "innovation and entrepreneurial spirit," hinging on increased educational outcomes. Many good talking-points and topics-of-the-moment, but the editorial is quite sparse on actual numbers, comparisons, evidence, or needed actions.

The editorial incorrectly opines, "...as the state's taxpayer base ages, the ability of these citizens to pay for the increased services they will need will be limited even as the number of workers supporting them will be fewer." This is the same reasoning used by those selling the Social Security crisis. As I've noted previously, tax issues are primarily problems of incidence not burden.

Should we remove our manufacturing machinery and equipment tax exemption? Should we discontinue funding projects like the Moderne and Miller Park? Should we raise taxes on the wealthiest? Should we increase capital gains and corporate taxation? Or should we continue to cut programs and services, to lower our quality of life?

People expect services, coinciding with an increasing standard-of-living (paid for with taxes). To simply state property and income taxes are too high (a nebulous statement unless some type of comparison or operationalization is provided), may sell papers, but it does not explain or contribute anything to the discussion.

And, to throw in the (paraphrasing) Education Will Save Everything slogan is pointless. "A smarter, better-prepared workforce, after all, would be better able to compete and command higher wages." The problem is not a lack of skills, it's a lack of jobs.

To keep pushing the "Wisconsin taxes are a major deterrent to businesses locating here" mantra also conflicts with reality. And, as I've stated before, "If, as a nation, we are so concerned with taxation, then we need federally standardized tax rules, equally written and applied to all states. Not our current hodge-podge of individually state-controlled breaks, bribery, and favoritism." If these are crucial matters to the progress and growth of our local and national economy shouldn't we be cooperating on a more federal level, rather than continuing to operate under beggar-thy-neighbor policies?

The Journal also implies years of arduous taxation, in general, has been holding Wisconsin back. Nowhere is there mention of Wisconsin's lack of a modern transportation infrastructure as a hindrance to business location decisions. Newsflash: Infrastructure matters to business.

But then the editors offer a stunning conclusion, "Political leadership should work to keep taxes in check and to put the property tax on a diet. More important, they should ensure that schools and other essential state services are able to meet their obligations." There you have it; circular logic at is best. No real point, no real insight. The Fourth Estate has no clothes.

For Further Reading:
America's Granny Bashers
Hands Off Social Security
Obama Suggests Defaulting on National Debt
State Comparisons

Development Desperados

Just a few thoughts on Mike Johnson's article, in the Milwaukee Journal-Sentinel, Democrats zoom in on property tax loophole.

Johnson opens with the crux of the issue, "Senate Democrats are moving to close a loophole that has given developers huge property tax breaks by planting crops on land that is zoned for residential and business purposes."

Developers whine that not allowing them this ability to cheat on their taxes, and essentially be subsidized by the rest of us, will impede their development plans. In reality, closing such a loophole will encourage more efficient development - promoting higher density and agglomeration economies. Which would lead to more optimal outcomes, rather than allowing developers to sit on land, pay artificially low property taxes, and lobby local and state government to subsidize development on and around their land.

This sentence from the article sums up the inequity of the situation, "...the loophole shifts property taxes that should be paid by developers to other taxpayers, mostly homeowners."

Race To The Bottom

Bill Foy, a retired Menomenee Falls investment banker, opines in the Milwaukee Journal Sentinel that Milwaukee is unappealing to business because of card check, prevailing wage standards, mandated sick leave, property taxes, and the Milwaukee Public School system.

Is this investment banker really preaching to us, "...look beyond our present, personal gratifications and to consider how best to sustain and grow our business base for our long-term benefit and that of our children"? Is that what the financiers were practicing these last 30 years? Was is that forward-thinking, love-the-children mojo that culminated in the destruction of the world economy in 2008 and the near-Depression conditions we're in now? It's funny to see businessmen, again and again, failure after failure, still telling the rest of us how everything ought to be.

The problem is that we don't have federal standards regarding incentives and development. If we did, we wouldn't need to worry about prevailing wages and such because that would be the national standard. A model of labor and business working in cooperation - producing needed products and services, equitably sharing in the gains, and exporting this policy worldwide with our trading partners - lifting all boats. As opposed to our current development policies which are seeing too many citizens' economic boats capsize. When did we decide an honest day's work wasn't worth an honest day's pay?

To say mandated paid sick days are part of the problem is disingenuous at best. How can sick days, a policy only developed in the last year, be part of a long-standing business impediment problem? Mandated paid sick day policies are not yet implemented. Some communities in the Milwaukee area have already banned them. Conversely, 9 To 5 has found no negative effects from the enactment of sick days; the results have been positive.

Card check is another policy that has not even been enacted. These conservative businessmen are afraid of things that aren't even there. More than serious business impediment issues, Foy's complaints seem to just be proactive griping - getting the typical business-friendly talking points out there to frame and steer the debate.

We have only exacerbated the public school issue by implementing various semi-privatization schemes. Following private-sector models have not led to school improvement - as with health care, retirement, the airlines, etc. - though its proponents demanded it would. This looting of the public coffers has allowed private agencies to divert funding from public schools to unsupervised, untested, and underperforming voucher schools.

And, as I've written about here before, focusing on property taxes as if they were the only taxes paid is just plain sloppy analysis and presentation. As if property taxes were the only taxes we had to worry about. Property taxes are also part of a much broader discussion: how immensely an important source of revenue they are, what they pay for, the tax incidence - who the burden falls upon, policies they support, and how they've changed over time.

If we continue to follow the lead of these Captains of Industry, these Free Marketeers, we're going to be a nation of Walmart workers. We're supposed to be leading the world with a smart, efficient, sustainable model of growth enabling a high standard of living. But since we became enraptured with The Market we're racing backwards toward lower wages, poor health care, and without any pension or chance of decent retirement. This seems to be the "growth" model Foy and his ilk want us to continue to pursue. Why wouldn't he? He and his bretheren have made out like bandits off such policies while the workers below them were the ones having to provide the sweat, take the cuts, and make the sacrifices.


For Further Reading:

The Institute for Wisconsin's Future has admirably reported on: a) the falsehood of Wisconsin as a "tax hell," b) how the corporate sector underpays taxes by $1 billion, c) many corporate tax avoidance schemes, and d) correcting the many myths about "burdensome" property taxes.

Inflation & Valuations

I know people don't enjoy paying property taxes. But like any other investment or purchase, one must consider taxes (along with other expenses) when weighing the pros and cons of buying a property.

One factor that seems to slip most everyday homeowners' minds is inflation. This depreciates your home's value a few percentage points each year. Everything generally tends to cost slightly more each year. This process automatically lowers the values of properties. So even in the years when your property assessment valuation remained the same as previous years, you were actually losing money due to inflation. Some of this is offset during an appreciating market. But this can also be exacerbated during a downturn in the market, such as we're experiencing now.

Now one can always say, "I want the assessed value low so that my taxes are lower. I can always ask whatever I want, and get more than that, when and if I sell."

That is a bubble market mentality. "I can always get above the assessed value. Real estate doesn't depreciate." Savvy buyers, and those whom have been brought back to reality by our recent financial upheaval, would not pay a large amount above an assessed valuation - since it's based on sales of comparable properties. Hoping to pay a property tax amount below a property's fair share and then reaping large rewards later upon a sale is: 1) mostly a pipedream, 2) unfair to those paying their fair share, 3) hurtful to needed programs funded by property taxes, and 4) selfish.

Just something to think about as people complain about the [supposedly overly high] value of their properties. Do owners actually want to see their values decrease? It would be analogous to wanting your stocks to stay low in value (or decline) so you don't have to pay capital gains tax. Taxes are the price of civilization and we all need to be more aware of such when we make our investments and purchases...rather than complaining after we've overextended (bought too much house) ourselves.

For Further Reading:
Assessment v Property Tax
Tax Burden Shifting: Exemptions
Wisconsin Tax Truths in the Land of Tax Trickery

Wisconsin Tax Truths in the Land of Tax Trickery

The following is a point-by-point battery of tax information that will hopefully dispel some common myths and place the taxation discussion in context.

For fiscal year 2002, state and local government spending averaged 19.9 percent of total state income. Wisconsin averaged 21.4 percent, which ranks 18th among the states. And in the middle among neighboring states: Iowa 21.6, Minnesota 21.5, Wisconsin 21.4, Michigan, 20.3, and Illinois 18.1. Yet somehow the media and special interests would have you believe spending is out of control. It isn’t.

Over the last 20 years, spending in Wisconsin has declined steadily relative to the U.S. average, and is now half of the level it was in the mid-80s. Pundits and radio talking-heads bellow about excessive spending and such. They’re wrong and willfully misinforming the public.

There’s been no surge in state and local taxes, which now take a smaller percentage of total income than in the 1980s and ‘90s. Milwaukee taxpayers pay a smaller proportion of their income in city property taxes than do almost all their suburban neighbors in Milwaukee County. Yet from some of the articles being written most lead one to believe the City is overly expensive and the suburbs are a bargain. Yet the reality is almost just the opposite as far as tax efficiency is concerned.

Here are property taxes as a percent of income: 1960 – 2.61%, 1970 – 2.86%, 1980 – 2.76%, 1990 – 2.29%, 2000 – 2.26%. This illustrates how important it is to put things in context and to frame the topic being discussed. As a percent of income, taxes haven’t increased as much as wages. So even though the dollar amount on your property tax bill has increased (the work of inflation and higher assessments due to a booming market), on average, so have your paychecks (even though barely, again, accounting for inflation). One thing to remember - even though, let’s say your home appreciated by 10 percent, that does not mean your property tax is going up 10 percent. The bill depends on 1) the overall appreciation occurring in the real estate market and 2) the total City budget. So, if all values averaged a 12 percent increase, chances are, your bill will go down. And, if you’ve see any pay hike at all, your property taxes are now an even lower percentage of your total income. It should also be pointed out that these taxes pay for: City services, County services, public schools, MATC, and MMSD. The array of services and amenities provided are quite a bang for the buck.

The most accurate way to compare taxes in Wisconsin with those of other states is to look at all the forms in which taxpayers give money to support state and local government, Such as state taxes (income and sales), local taxes (property taxes and sales), and fees for services. On this broadest measure of how much government takes from its citizens, Wisconsin ranks 15th. Wisconsin funds services more from taxes than fees. Again, putting things into perspective, taking a more holistic view, we see that Wisconsin is not the tax hell certain factions claim it is.

Increases in individual income and property taxes are due to the decade-long shifting of tax burden from businesses to individuals. A series of exemptions for business property over the last 30 years has significantly reduced business property tax costs. This, in turn, has increased the taxes paid by homeowners, from below 50 percent of property taxes in 1970 to nearly 70 percent today. When businesses pay less, homeowners pay more. The next time you here some supposed expert pushing for lower taxes, try to get a handle on the fine print. The majority and consensus of research has shown that lower taxes alone do not attract nor create jobs. The next time someone says we need to provide a subsidy, create a TIF, exempt a business, provide a tax break, etc., be very leery. There is no free lunch. A tax deduction for business is an increase for homeowners.

The fiscal gaps of the early 1990s were closed by raising regressive sales and excise taxes. Taxes were not raised on the rich, corporations were not asked to pay more. This is just another example of how those with the most means are not asked to sacrifice for the sake of community. When budget gaps need to be closed, average taxpayers pay more, and/or services for those taxpayers are cut. Concurrently, corporations and other well-connected are sheltering income, avoiding taxes, and putting their hands out for taxpayers subsidies. We have gotten rid of welfare as we knew it. Too bad it has morphed into an inverse Robin Hood scheme, where, today, the primary welfare recipients are the well-to-do.

The share of Wisconsin taxes generated by corporate income taxes dropped by over 50 percent between 1979 and 2002 from 11.3 to 5 percent. The share of income taxes paid by working families grew from 47.4 to 54.5 percent. A 2000 review of state records showed that 11 of the 15 largest banks paid no corporate income tax. In the business year ending 2002, almost 2/3 of Wisconsin businesses subject to tax reported no income and paid no corporate income tax. Of the 4,851 corporations with total revenue of at least $100 million, 65 percent paid Wisconsin corporate income of $0 in 2003. These businesses sure are exemplary corporate citizens. If only there were a way for two-thirds of the citizenry to avoid paying income taxes.

Since the 1980s, the federal government has been steadily shifting more responsibilities to the states. Between 2000 and 2003, the United States saw a federal-to-state tax shift of historic proportions: the share of total tax burden borne at the state and local level jumped 15 percent. This is the largest shift since 1947-50. Since 1962, the share of total federal receipts collected from the regressive payroll tax has risen from 17 percent of total receipts to 40 percent, an increase of 135 percent. Meanwhile, the total share supplied by progressive income and corporate taxes has dropped from 63 percent of total receipts to 52 percent, a decline of 17 percent. Since 1962, the share of federal revenues contributed by corporations has declined by two-thirds, while the share contributed by individuals has risen 17 percent. If you’re beginning to see a trend here – the rich paying less, average taxpayers paying more – you’re very perceptive.

State tax policy has grown in importance because of its use as an instrument to foster economic development. Over the past 25 years, state governments have engaged in wasteful competition against each other for business investment and jobs. The sales and use tax accounts for nearly one-third of state tax revenue. The personal income tax replaced the sales tax as the single most important source for revenue for the states, which accounts for about one-third of state tax revenue. The corporate income tax accounts for less than 6 percent of state tax revenues. State property taxes and estate taxes generate very little revenue (less that 5 percent of total state revenue). Specialized excise taxes account for approximately 20 percent of total state tax revenue. The states collect about 40 percent of their total revenue through taxes. And more and more, through the years, average citizens have been shouldering more of the burden.

In 1997, Citizens for Tax Justice concluded that Wisconsin’s corporate tax burden ranked 44th in the nation. A Federal Reserve Bank of Boston study, in 2003, found that Wisconsin ranked 50th among all states and the District of Columbia in terms of the share of total state and local taxes paid by business. The Institute for Taxation and Economic Policy found Wisconsin’s corporate tax rate was 26th nationally when measured as a percent of individual income taxes. A January 2004 study undertaken by Ernst and Young found that Wisconsin ranked 45th nationally in the share of all state taxes paid by corporations. The share of taxes paid by business declined 47 percent during the last 30 years. Business doesn’t pay squat here in Wisconsin. These stats just underscore the shamelessness of the corporate community and their talking heads when they beg, plead and lie for more tax breaks. What we have established is a commitment-free business community, whose social costs are almost completely incurred by taxpayers. So, not only are taxpayers covering the majority of costs for the services we all desire, taxpayers are also filling the coffers of corporate crooks whom have been steadily siphoning more and more public dollars into private accounts through subsidies, tax breaks, tax havens, and such.

Workingmen and women pay about 80 percent of Wisconsin’s general purpose taxes. Workingmen and women also pay the majority of property taxes statewide (68 percent), while industry’s share of the property tax declined from 18 percent to 4.5 percent between 1970 and 2004. And guess who gets to make up that 13.5 percent decline in the share of the property tax paid by business? You do, silly, the average homeowner.

The tax rates for the highest income households in Wisconsin dropped from 10.8 in 1977 to 6.75 in 2002. In Wisconsin in 2002, the richest one percent of taxpayers paid 8.1 percent of their income in state and local taxes, the least by far of any income group, and only 5.9 percent after deducting from their federal taxes. The poorest 20 percent of taxpayers paid 10.2 percent in state and local taxes in 2002, and middle-income taxpayers paid the most, 11.9 percent. Now can’t we all agree that this should be the other way around? Those with more means should pay more. We have been creating and solidifying an impoverished underclass, due to our regressive policies and increasing inequality. We are giving a hand to those who need it the least. I’d rather see $400,000,000 in our taxes go to creating 1,000 jobs, paying $40,000 a year, for 10 years; rather than seeing $400,000,000 go to Miller Park.

Since 1974, residential property owners have carried and even greater tax burden with the reduction in manufacturing property tax revenue due to the establishment of the Machinery and Equipment deduction which eliminated as much as 50 percent of the property tax revenue in some communities. This is just another lobbying triumph of the business community that transferred more of the tax burden onto everyday citizens.

And, for those who say we pay too much for education: Only 24 percent of Wisconsin adults 25-and-over are college graduates, which ranks the state 32nd in the country. With all the talk of the “knowledge-based economy” and the importance of having a college- educated workforce to fill jobs and for creating new ones, this ranking doesn’t bode well for Wisconsin’s future.

Per-person income in Wisconsin has been below the national average for several decades, and was 2.3 percent below in 2003. Hmmm, so we’ve been earning less than the average and yet we’re being continually asked to pay more so that more well-off individuals and businesses can pay less. Isn’t a big selling point of the lower-taxes cabal that by allowing the rich to pay less, in turn it will help grow business, thereby increase jobs and wages? But if empirically we see that isn’t true, isn’t it about time we say enough is enough?

State and local taxes play a relatively small part in business location decision-making. The facts are in, the research has been done. Many other factors, well ahead of taxes, weigh much more heavily in business location decisions than taxes. Continuing this bribery and shake-down policy only exacerbates inequality, makes average taxpayers pay more than their fair share, contributes to inefficiency and wastefulness, and simply transfers money from workers to the rich.


Works Cited

Brunori, David State Tax Policy: A Political Perspective.

Collins, Chuck; Chris Hartman; Karen Kraut, and Gloribell Mota 2004 “Shift Tax Cuts” United for a Fair Economy. April.

Institute for Wisconsin’s Future 2006 “TPA/TABOR Jr.: A State Fiscal Illusion.” Feb.

Institute for Wisconsin’s Future. “Project Taxes: Tax Fairness”

Johnson, Nicholas and Daniel Tenny 2002 “The Rising Regressivity of State Taxes.” Center on Budget and Policy Priorities. Jan.

Norman, Jack 2005 “Exposing the Wisconsin Tax Hell Hoax.” Institute for Wisconsin’s Future. Jan.

Norman, Jack 2003 “Some facts about property taxes in Milwaukee.” Institute for Wisconsin’s Future. Nov.

Statz, Bambi 1997 “Windfall for the Wealthy.” Institute for Wisconsin’s Future. Jan.

Wisconsin Education Association Council. 2004 “Tax Shifting and Business Taxes in Wisconsin.” Research Bullets. May.