Boots & Sabers

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Tag: Taxes

What to do with a surplus?

by | 2136, 20 Jun 2121 | | 0 Comments

Here is my full column that ran in the Washington County Daily News last week. I’m glad to see that the legislative Republicans were of the same mind as they pushed a $3.4 billion tax cut into the budget.

A new estimate from Wisconsin’s Legislative Fiscal Bureau (LFB) shows that Wisconsin state government will collect billions of dollars in taxes above their original estimates. The political wrangling between Republicans and Democrats over this unexpected windfall reveals the yawning divide between the political camps.

 

Whenever the state legislature crafts a budget, they must estimate the taxes that the state will collect. As the national and state economy changes and actual collections are counted, the LFB periodically updates these estimates to inform the Legislature. In January, the LFB issued an estimate for general fund tax collections and made adjustments to them when various state and national laws were passed changing the tax laws.

 

As the state nears the end of the current budget and fiscal year, the LFB prepared its most recent estimate that records “unprecedented” tax collections through May of this year and forecasts that for the time period encompassing the remainder of this fiscal year and the 20212023 biennium will exceed previous estimates by almost $4.5 billion.

 

To put it another way, the state of Wisconsin is projecting to collect the equivalent of $762 more in taxes from every man, woman, and child in Wisconsin than what they thought they would collect a few months ago. While politicians welcome this unexpected surplus, the people actually paying the taxes do not share their joy.

 

Democrats throughout Wisconsin are championing ways to spend the projected tax surplus on more and bigger government. Democrat Governor Tony Evers and legislative Democrats are pushing to pump more money into thinks like the government education system, transportation, welfare, and the normal litany of liberal priorities.

 

Meanwhile, Republicans in the Legislature are championing ways to cut taxes to ensure that the projected surplus never materializes. With the philosophy that it is the people’s money, Republicans are exploring how to make sure that the people never send the money to the state coffers in the first place.

 

The difference in philosophy is stark. Democrats see record tax collections as free money to spend. It is as if they won the lottery and the only question is how they will spend their good fortune. Republicans, for the most part, see record tax collections as evidence that the government is confiscating too much from the people and they should cut taxes to make sure that the government does not over collect.

 

Both parties must remember that an estimate is just that: an estimate. The LRB gave an estimate in January that said one thing. Six months later, they have calculated another estimate based on what has changed since January. In that short time, the estimate went up dramatically based on actual tax collections and an improved economic forecast. An estimate is as good as it can be the day it is written, but change by the next morning.

 

Things change. Economies slip into recessions. War, or the threat of war, can change the economy. Trade policies impact some areas of the economy more than others. Key Wisconsin industries may be disrupted. When politicians make decisions to spend money that is not actually in the bank, they are obligating taxpayers to spend that money whether the projected surplus materializes or not.

The other economic wild card that is rearing its head in Biden’s America is a potential return to double-digit inflation. The trillions of printed dollars spewing out of Washington are having the unavoidable effect of devaluing the dollar. It is a simple principle. If the government is printing currency faster than the underlying economy can absorb it, the value of each dollar decreases. This inflation hits the lower and middle classes the hardest as they see the price of normal goods and services increase faster than their incomes. Inflation has been increasing at the fastest rate in decades and does not show any sign of slowing.

 

As Democrats salivate over spending a projected tax surplus, the families paying for that surplus will also be having their budgets squeezed by raging inflation. It is a budgetary pincer that will squeeze the middle class at a time when the middle class is just recovering from a pandemic.

 

The decisions for the Legislature should be a very simple one. If the state collects more taxes than it planned to, then give it back to the people who paid it. They should not redistribute it to people who did not pay the taxes and they should not spend it on things that make politicians feel good about themselves.

 

Just give it back. It’s not yours.

Biden Tax Plan Would Hurt The Emerald Isle

by | 0944, 12 Apr 2121 | , | 4 Comments

I think it’s kind of funny that the Irish were celebrating Biden’s win due to his Irish heritage and he might tank their economy.

For the last 20 years Ireland has had a simple message: invest here and you will pay just 12.5% tax on your Irish profits.

That compares favourably to headline corporation tax rates of 19% in the UK, 30% in Germany and 26.5% in Canada.

 

It is an article of faith in Irish politics that the 12.5% rate has been vital to attracting US investment.

But that tax advantage could be seriously undermined if President Biden gets his way.

 

The most striking of his proposals – and the one of most consequence for Ireland – is for a global minimum corporate tax rate.

 

The US Treasury Secretary Janet Yellen has suggested a 21% minimum rate.

 

“We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” she said in a speech last week.

 

“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations.”

 

Essentially that would mean if a company paid tax at the lower Irish rate, then the US (or other countries) could top up that company’s tax in their jurisdiction to get it to the global minimum.

 

So if a US company had a presence in Ireland primarily for the tax advantage, that advantage would disappear.

Washington State Eyes Wealth Confiscation

by | 2035, 2 Feb 2121 | | 3 Comments

Remember that the income tax started out as a tax on only the very rich too.

OLYMPIA, Wash. — Washington state’s richest residents — including Jeff Bezos and Bill Gates — would pay a wealth tax on some financial assets under a bill proposed by a lawmaker who says she is seeking a fair tax code at a time when so many people are struggling due to the pandemic.

 

Under the bill, a 1% tax would be levied on “extraordinary” intangible financial assets including cash, publicly traded options, futures contracts, and stocks and bonds — but not income. The first $1 billion in value would be exempt from the tax that would apply to residents’ taxable worldwide wealth.

Tax Collections Down

by | 2230, 10 Jun 2020 | | 1 Comment

As expected.

Preliminary information on taxes collected by DOR for the month of May, 2020, is now available. As anticipated, due to the coronavirus pandemic and its impact on employment and the economy, the May report indicates a continued reduction in collections. May, 2020, preliminary tax collections were $1,261 million, which is $66 million below collections of May, 2019. And, for the 11 months of the current fiscal year, collections are $380 million below those over the same 11 months of 2018-19.

Although collections for May reflect a continued decline, the decline is significantly less than that shown in the April collection report. April, 2020, collections were $870 million below April, 2019, collections. In contrast, the May, 2020, collections are $66 million below those for the same month in 2019.

The decline in May collections is primarily attributable to lower state sales and use taxes, which reflects that the coronavirus pandemic has severely impacted economic activity in the state and tax collections. Reduced collections for the 11 months of the current fiscal year have been affected by the extension of income and franchise tax filing deadlines from April to July 15 in 2020. It is important to note, however, that income and franchise tax returns and estimated payments filed by July 15 will accrue to state fiscal year 2019-20 under the state’s budgetary cash and modified accrual method of accounting.

Two Million Taxpayers Would Receive Tax Cuts Under GOP Bill

by | 0820, 25 Feb 2020 | | 4 Comments

But Evers will still veto it. It’s his money… not yours, don’t you know?

More than 2 million taxpayers would see a tax cut from a Republican passed bill in the Wisconsin legislature, according to an analysis from the Center for Research on the Wisconsin Economy (CROWE).

“We find it would reduce taxes for about 2 million taxpayers and reduce state tax revenue by about $200 million, so the reduction per affected taxpayer is about $100,” the CROWE study found. “Low-to-middle-income taxpayers would benefit the most. Moreover, the expansion would reduce the effective marginal tax rates (MTR) and thus provide work incentive for some low-to-middle-income taxpayers, although it would also raise the effective MTR and thus reduce the work incentive for some relatively high-income taxpayers.”

The state Senate and Assembly both passed the tax-cut package Thursday on largely party-line votes.

Gov. Tony Evers opposed the cuts, but has not said if he will sign or veto the bill.

Tax Cut Heads to Evers’ Desk

by | 1444, 20 Feb 2020 | | 2 Comments

Remember that we do not have a tax surplus… yet. We have a projection that says that we will have a surplus at the end of the budget next summer. Bearing that in mind, this is a good bill. It takes a projection that says that the state is collecting more taxes than it needs and reduces the taxes accordingly. If the projection is wrong and we head into deficit, then they can adjust taxes the other direction. To my point in a column a few weeks ago, however, this is not spending money we don’t have. It isn’t spending anything at all. It is simply having the government collect LESS so that it does not run as much of a surplus over the term of the current budget.

The tax cut bill would would deliver an average reduction of $106 for most qualifying filers. Married couples who file jointly would see an average cut of $145; all other filers would see an average reduction of $81. The bill also would reduce taxes for manufacturers by nearly $45 million by exempting their machinery and tools from property taxes and trim state debt by $100 million.

This is a good bill. It is unfortunate that Governor Evers will likely veto is so that the government can overcharge for their services and spend more.

Time for Flat Tax?

by | 0949, 30 Jan 2020 | | 2 Comments

Absolutely. Or no state income tax. Other states do it. Wisconsin could too.

[Madison, Wisc…] With the recent news from the Legislative Fiscal Bureau that Wisconsin’s economy continues to be strong and tax revenue is expected to be $818 million more than originally anticipated at the end of the 2019-2021 biennium, the John K. MacIver Institute for Public Policy is asking Governor Tony Evers and the Legislature to consider adopting a 3% flat tax.

MacIver President Brett Healy issued the following statement:

“The most recent fiscal estimate is great news and another reminder that fiscal discipline, sensible regulation and cutting taxes has been a winning recipe for all Wisconsinites. We should use this momentum, build on our record of success and lock in long-term and meaningful tax reform that will benefit all Wisconsinites. Now is the time to adopt bold tax reform that will make Wisconsin an economic powerhouse for generations to come.”

Wisconsin’s top income tax rate of 7.65% is the 10th highest in the country and our lowest income tax rate of 3.86% is the 6th highest rate among states with a progressive income tax. Our lowest income tax rate was previously tied at the 4th highest among states with a progressive income tax before 2019 Act 9 and Act 10 tax reforms lowered the two lowest income tax bracket rates.

Though our lowest income tax rate was reduced in 2019, Wisconsin is still one of the worst places for the working poor in terms of the tax rate they pay. If Wisconsin adopted a 3% flat income tax rate, Wisconsin would have the lowest tax rate in the Midwest and the 2nd lowest flat tax rate in the entire country.

“We can use the temporary revenue surplus to create a simpler, fairer tax code that will lower the tax burden for everyone,” Healy said. “A low 3% flat tax will help Wisconsin attract new families, recruit new businesses, keep our retirees from leaving and entice college graduates to work in the state.”

 

What to do with a surplus?

by | 0728, 24 Jan 2020 | | 7 Comments

Boy, if this story doesn’t perfectly illustrate the state of politics in Wisconsin. Tax collections are way up thanks to a booming economy under President Trump and policies put in place by Wisconsin Republicans. Republicans want to give the surplus back to the people. Democrats want to spend it. Evers is playing pickleball.

MADISON (AP) — Wisconsin tax collections are expected to come in more than $818 million above projections made last summer, an increase reported Thursday that will fuel the push to make an election year tax cut.

Republicans who control the Legislature are discussing a tax cut, while Democratic Gov. Tony Evers has been more cautious and voiced concerns about meeting other priorities and warding against a future economic downturn. Senate Republicans, whose leader Scott Fitzgerald is running for Congress, are pushing to lower property taxes. Assembly Republicans also support cutting taxes, but aren’t fully behind lowering property taxes.

Fitzgerald said he will continue to work on a property tax cut that can be passed before the Senate adjourns for the year in March.

Assembly Speaker Robin Vos said Republicans would not ‘‘grow the size of government’’ but instead would look at paying down debt or cutting taxes.

He didn’t specify which taxes or debt might be targeted.

Democratic Assembly Minority Leader Gordon Hintz said any surplus should be used to address areas of urgent need, including bolstering school-based mental health and funding for the University of Wisconsin System.

Evers did not immediately return a message seeking comment.

Gifts in the mail

by | 0848, 3 Dec 1919 | | 0 Comments

My column for the Washington County Daily News is online and in print. In it, I take a quiet stroll through my property tax bill and look for the source of the tax increases. In every case, the government taxing me is increasing spending. Coincidence? I think not. Here’s a taste:

It is that time of year again! You can feel the excitement slicing through the air like hard sleet. People all over Wisconsin are going to their mailboxes and finding their property tax bills awaiting them. Despite years of politicians promising to control property taxes, Wisconsin still has the fourth highest property tax burden in the nation.

As I wrote in a column a few weeks ago, when it comes to property taxes, the levy is everything, and spending determines the levy. When a government uses the property tax, they begin by determining how much total money they plan to spend. Then they determine how much of that spending will be funded by the property tax. That number is the levy. Then the levy is divided into the aggregate property value and the mill (tax) rate is determined. When you hear politicians bragging about the mill rate, be wary. It is one way that they camouflage more spending and higher taxes.

To illustrate this, let us walk through my property tax bill and the five governments that are forcing me to send them money by threatening to take away my home if I refuse. My example is anecdotal, of course, but I encourage all of you scrutinize your property tax bills when they arrive. The assessed value of my home remained unchanged between 2018 and 2019, so the tax changes shown are not reflective of a change in home value.

[…]

In total, my property taxes increased 3.4% since last year to pay for an aggregate spending increase of $5.9 million by governments.

For those who wonder why Wisconsin’s property taxes are so high, one need only look at the budgets of the governments that feed off of the property tax. Bloated spending that gets more bloated every year results in higher taxes. The reason for high taxes is simple: it’s the spending.

West Bend School District Levies 7.17% Tax Increase

by | 1000, 5 Oct 1919 | , | 11 Comments

I see a story in the Washington County Daily News today where the West Bend School District has returned to the cloudy language of taxes.

WEST BEND — Good news for property owners in the West Bend Joint School District: the budget is balanced and the mill rate — read: taxes — will not increase from last year.

The district’s mill rate will remain $7.97 per $1,000 of assessed value. Thus the owner of a home valued at $203,000, for example, will pay $1,617.91 in taxes to the district.

There are several factors behind the district’s decision not to raise taxes.

West Bend is a low spending district, and was awarded an extra $299 per student in state aid for the coming year. It does have declining enrollment…

This is the game that the school district and other taxing bodies like to play. They try to pretend that the mill rate is equivalent to tax burden. It is not. For several years, after a lot of public discussion, we finally got the West Bend School District to stop doing this. It looks like they have returned to their old ways.

Here’s the deal… the tax burden is the total money extracted from the taxpayers. If the district decides that they want to extract $40 million from the taxpayers through a property tax levy, they simply divide that amount into the aggregate property values to derive the tax rate – called the mill rate. It is a simple calculation. When it comes to discussing the tax burden, the mil rate and the property values are irrelevant. The tax levy is everything.

In this case, despite receiving an increase in state aid, the West Bend School District is increasing property taxes by 7.17%.

Last year, the school district levied $39,174,600. This year, they are going to levy $41,983,435. That is a 7.17% increase in taxes no matter how you slice it.

The school district is celebrating that they kept the mill rate flat, but that is only because property values in the district have increased thanks to the good economy. They are simply raising taxes at about the same pace as property values are increasing, thus keeping the rate flat.

Why does this matter?

It matters because, despite the proclamations of the school district, the tax burden is increasing for a school district with declining enrollment. For example, let’s say you are a senior on a fixed income living in a house that was valued at $200,000. Your property taxes for the school district were $1,594 last year. After a reassessment, your house is now valued at $218,000. Even though the school district is keeping the mill rate the same, now your property taxes for the school district will be $1,737.46 – a $143.46 increase. Your income didn’t increase. You don’t derive any value from the increased property value unless you sell your house. But you are paying more. Yes, your taxes went up despite the district maintaining a flat tax rate.

The mill rate in meaningless. It is simply a derived number. The levy is everything. The levy is how much money the taxing body is extracting from the taxpayers. And however they want to spin it, the West Bend School District will increase property taxes 7.17% in a single year.

Credit to the Finance Director, Andrew Sarnow, for making this point later in the story:

“Early estimates say they will not give us much more money; in fact, it probably will be a little less,” he said. “So where does the rest of the money come from if they say we can have a little more money per child? Property taxes — which is why our levy is going up about seven percent.”

But property values are growing by about the same amount. This year, the district is worth almost $5.3 billion, which is an increase from the $4.2 billion of value last year. This is growth in size; new residences or

businesses, with a very small increase from homes getting reassessed. If homes were reassessed for a higher value, then the taxation rate does not increase but more money is acquired through taxes. A homeowner’s taxes for everything, not just the school district, would also increase if this were true. But the seven percent increase came largely through growth and not reevaluation.

What I disagree with is the supposition that most of the property value increase is from growth. Some of that is true, but in 2018, the residents of West Bend saw an average property value increase of 12% after a city-wide assessment. The City of West Bend is not the entire school district, but it is the lion’s share of property value.  So if my property value went up 12% and my mill rate is flat, did my taxes go up? yes, they did. And did my income necessarily rise to meet the tax burden? Nope. So the tax burden continues to eat into my disposable income and standard of living.

Rich Lefties Support Wealth Tax

by | 1245, 24 Jun 1919 | | 6 Comments

Heh.

A group of nearly 20 wealthy Americans on Monday released a letter asking for all 2020 presidential hopefuls to support a “moderate wealth tax” on the richest one-tenth of the richest 1 percent of Americans.

“America has a moral, ethical and economic responsibility to tax our wealth more. A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity, and strengthen our democratic freedoms,” the letter says, as published by The New York Times.

“Instituting a wealth tax is in the interest of our republic,” it continues.

The document is signed by financier George Soros, Facebook co-founder Chris Hughes, heirs like Abigail Disney and others.

The letter calls for the tax revenue to be used in “smart investments for our future,” including addressing climate change, providing student loan debt relief and universal child care, modernizing infrastructure and providing tax credits for low-income families.

Here’s the thing… there is nothing stopping these folks from liquefying their assets and cutting a check to the Treasury Department. But that’s not what they want. They want to tax YOUR accumulated wealth. If you think that they are going to stop at just taxing the top tenth of one percent, you’re nuts. Remember that when the income tax was implemented in 1913, it only taxed people making over $20,000 per year (at 1%, no less). That’s would be people making over $507,000 in today’s dollars. That is, conveniently, less than 1% of income earners in today’s America.

Then, over time, the threshold was lowered and the rates increased. The people who wrote this letter aren’t stupid. They know that. What they want is a wealth tax to be implemented so that it can be eventually expanded to include anyone with any accumulated wealth. It will never end with just the super rich paying it. They are just drying to open the door on a wealth tax by appealing to people’s envy.

So…. no.

Feeling the weight of government

by | 0640, 17 Apr 1919 | | 0 Comments

Here is my full column that ran in the Washington County Daily News yesterday.

April 15. A date that lives in infamy. As the date by which all Americans must submit their income tax forms to make sure the government has extracted enough hard-earned money to fund the bureaucracy, April 15 also serves as a good date to contemplate the cost of government. Given that this April 15 is on the cusp of Wisconsin’s biennial budget debate, it is also a good date to look at how much more costly our new governor wants to make our government.

According to the Tax Foundation, Tax Freedom Day in 2019 is April 16. That means that every dollar that every single American earned up until April 16 is needed to pay the nation’s total tax bill of $5.29 trillion. The nation’s total tax bill is more than the nation’s total combined bill for housing, clothing, and food. Big government isn’t cheap. In Wisconsin, Tax Freedom Day comes even later on April 19. The cost of Wisconsin’s government is still more than most states.

If Governor Tony Evers has his way, Wisconsin’s Tax Freedom Day will push later into the year like Illinois or New York. The governor’s budget proposal includes over a billion dollars in tax increases and would increase taxpayer disparity.

When the Supreme Court ruled last year that states can collect sales and use taxes on internet purchases, Gov. Scott Walker and the Republicans neutralized the tax burden for Wisconsinites by offsetting the new sales tax collections with an equal across-theboard income tax cut. Governor Evers would reverse that decision and give the entire tax savings to only those in the lowest tax bracket.

At the same time, Evers’ budget proposes increasing the Earned Income Tax Credit, a welfare scheme paid through the income tax system, and lower taxes in the lower tax brackets. All of these ideas would lower income taxes for those at the lower end of the income scale.

In order to make up for tax decreases to the lower brackets, Governor Evers would increase taxes on the higher brackets by forcing single people who earn more than $100,000 and couples who earn more than $150,000 to pay regular income taxes on their capital gains. This is estimated to increase taxes by $505 million on Wisconsin’s higher earners.

For some perspective, figures calculated by the Wisconsin Taxpayers Alliance show that income filers earning over $100,000 comprise about 12% of all income tax payers, but they pay over 61% of all income taxes in the state. Evers’ budget proposal would continue the effort to foist more and more of the cost of government on an ever smaller group of income earners.

Not content to only hammer individual taxpayers with higher taxes, Evers would also cap the Manufacturers and Agriculture Credit to a mere $300,000 of income for manufacturers. This is projected to result in a whopping $516.6 million in higher taxes on Wisconsin’s manufacturers.

Just in case anyone thought they might escape Evers’ tax increases, he also proposed to increase gas taxes by eight cents a gallon and then index the tax increases to inflation. That way taxes would automatically increase without politicians having to bother going on record to do it with a vote. This would raise taxes another $485 million through the budget term.

Governor Evers has made it perfectly clear how much he would raise taxes if he had the power to do so on his own. As the legislative Republicans formulate their budget proposals, they should begin with the mirror image of Governor Evers’ proposal. The Republicans should start with a billion dollar tax cut for all Wisconsinites and let the Governor try to negotiate from that starting position.

Wisconsin’s tax burden is not good, but it has been improving for the last eight years. Republicans should fight hard to maintain that trajectory for the benefit of all Wisconsinites.

Feeling the weight of government

by | 0646, 16 Apr 1919 | | 1 Comment

My column for the Washington County Daily News is online and in print. It seemed appropriate on tax day to take another look at all of the tax increases that Governor Evers wants to impose on us. Here’s a taste:

Governor Evers has made it perfectly clear how much he would raise taxes if he had the power to do so on his own. As the legislative Republicans formulate their budget proposals, they should begin with the mirror image of Governor Evers’ proposal. The Republicans should start with a billion dollar tax cut for all Wisconsinites and let the Governor try to negotiate from that starting position.

Wisconsin’s tax burden is not good, but it has been improving for the last eight years. Republicans should fight hard to maintain that trajectory for the benefit of all Wisconsinites.

 

State should refund tax surplus to the middle class

by | 0655, 13 Feb 1919 | | 0 Comments

Here is my full column that ran in the Washington County Daily News yesterday.

The state of Wisconsin has a problem. Thanks to the manufacturing renaissance, economic boom, and record employment fostered by the Republican policies of the previous eight years, tax revenue has been cascading into Madison at record levels. According to the Legislative Fiscal Bureau, this will leave an estimated budget surplus of over $600 million in state government coffers at the end of the current fiscal year.

In a perfect world, the government would do one, or both, of two things with a budget surplus. They would either give the money back to the taxpayers who paid it or pay down some of the state’s outstanding debt. What they should never do is use surplus money as an excuse to spend more.

It is worth pausing for a moment to consider what surplus tax revenue really is. Every tax dollar that is taken from a citizen by the government is a dollar that cannot be used by that citizen for anything else. It cannot be used to pay for the citizen’s food, child care, health care, education, clothing, or housing. It also cannot be used to start a business, support a charity, or saved for retirement. Politicians should treat each tax dollar as sacred because every dollar represents an opportunity seized from a citizen with the coercive power of government.

The Republicans in the Legislature are on the right track with their handling of the surplus. The Republicans are working to pass a middle-class tax cut that would simply give the tax surplus back to the taxpayers by increasing the standard deduction for the income tax for families who earn up to $155,000 and individuals who earn up to $127,000.

It is not a perfect plan because it does not refund the surplus to all of the taxpayers who actually paid the tax. By excluding higher income Wisconsinites from the tax cut, the Republicans’ bill still panders to the vanity of politicians seeking reelection by redistributing tax dollars to a favored subset of the populace — in this case, the middle-class taxpayers. But the Republican tax cut is still elegant in its simplicity and clarity of purpose. It is also far superior to the governor’s plan.

Gov. Tony Evers opposes the Republicans’ plan and has proposed a tax increase in its stead. While the state’s coffers are overflowing with the hard-earned money of Wisconsin’s taxpayers, Governor Evers is proposing a redistributionist scheme whereby he would increase taxes to pay for more welfare and a more restricted income tax cut.

In Evers’ plan, he would jack up taxes on Wisconsin’s manufacturers by capping the manufacturers’ tax credit. Then he would use that money to expand Wisconsin’s Earned Income Tax Credit, which redistributes tax dollars to many people who did not pay income taxes, and provide a modest graduated income tax cut to families who earn less than $150,000 or individuals who earn less than $100,000.

Evers’ plan still leaves about $375 million unfunded, which means it would have to come out of the state budget. Given that Evers has announced plans to support spending increases in every major area of state government, one would presume that he would have to find another tax to increase to pay for the $375 million.

Noticeably, Governor Evers does not factor the surplus into his plan at all. His plan is a straight redistributionist scheme that raises taxes on one group of Wisconsinites to give it to another group of Wisconsinites. Presumably, Evers wants to just spend the surplus on some other spending boondoggle. In other words, Evers has made it clear that he wants to spend every extra dollar sent to Madison and then hike taxes even further to spend more. Fortunately, Wisconsin’s voters elected a Republican Legislature to check Evers’ tax and- spending ways.

The Republicans in the Legislature should pass their middle-class tax cut and surplus refund and put it on Evers’ desk to sign forthwith. Then the taxpayers will see whether our new governor prioritizes his tax and spending increases over refunding the tax surplus to middle class Wisconsinites.

State should refund tax surplus to the middle class

by | 0813, 12 Feb 1919 | | 6 Comments

My column for the Washington County Daily News is in print and online. Here’s a sample:

The state of Wisconsin has a problem. Thanks to the manufacturing renaissance, economic boom, and record employment fostered by the Republican policies of the previous eight years, tax revenue has been cascading into Madison at record levels. According to the Legislative Fiscal Bureau, this will leave an estimated budget surplus of over $600 million in state government coffers at the end of the current fiscal year.

In a perfect world, the government would do one, or both, of two things with a budget surplus. They would either give the money back to the taxpayers who paid it or pay down some of the state’s outstanding debt. What they should never do is use surplus money as an excuse to spend more.

It is worth pausing for a moment to consider what surplus tax revenue really is. Every tax dollar that is taken from a citizen by the government is a dollar that cannot be used by that citizen for anything else. It cannot be used to pay for the citizen’s food, child care, health care, education, clothing, or housing. It also cannot be used to start a business, support a charity, or saved for retirement. Politicians should treat each tax dollar as sacred because every dollar represents an opportunity seized from a citizen with the coercive power of government.

The Republicans in the Legislature are on the right track with their handling of the surplus. The Republicans are working to pass a middle-class tax cut that would simply give the tax surplus back to the taxpayers by increasing the standard deduction for the income tax for families who earn up to $155,000 and individuals who earn up to $127,000.

Tax Cut Works Through Assembly

by | 0812, 8 Feb 1919 | | 1 Comment

I like the policy and I like the political tactic.

MADISON – A panel of Republican lawmakers advanced a plan to cut income taxes for middle-class families that Gov. Tony Evers has said he would oppose because of the way it’s funded.

The $338 million plan would reduce an average married couple’s income taxes by about $300 and heads to the Assembly floor next week.

But Evers reiterated he wouldn’t support the plan less than two hours after it passed the Legislature’s finance committee 10-3 over the objection of Democratic members.

“Republicans proved today that they’re more interested in protecting handouts for millionaires than providing tax relief for middle-class families,” Evers’ spokeswoman Britt Cudaback said about the Republican plan. “Introducing a competing proposal that uses one-time funds and leaves taxpayers on the hook for millions of dollars in the future isn’t compromise, it’s just fiscally irresponsible.”

But Republican leaders of the finance committee said, “we are delivering a real, middle-class tax cut for Wisconsin families.”

On policy, this is a very simple concept. The State of Wisconsin has a surplus of tax revenue and this would give it back to the taxpayers who paid it. For example, if you overpay for a cup of coffee, you get the surplus back, right? We call it “change.” Evers opposes this simple concept because he doesn’t really want a tax cut. He wants to keep most or all of the surplus and redistribute it back to people he likes. It would be like if you overpaid for that cup of coffee and Barista Evers handed your change to the bum shooting up in the Starbucks’ bathroom. Evers’ policy is neither fair nor right.

On the political front, the Republicans are doing exactly the right thing. Push this tax cut through the legislature and put it on Evers’ desk. Then he will be forced to veto a middle-class tax cut as one of his first acts as governor or let it pass. Hopefully, his better Angels prevail and he gives the taxpayers change for overpaying the cost of government this year.

On guns, taxation, and tyranny

by | 0657, 21 Nov 1818 | , | 2 Comments

Here is my column that ran in the Washington County Daily News yesterday.

Governor Elect Tony Evers has begun to select his staff and he is choosing people from the far Left of the political spectrum. This indicates that Evers does not have any intention of compromising with the Republican-led legislature. Evers plans to govern from and for the radical Leftist base that elected him. Radical Leftist doctrine dictates that Evers must seek to restrict gun rights and raise taxes. Wisconsin made a lot of progress on both of those issues under Governor Scott Walker, so it is a good time to go back to basics and remember why gun rights and lower taxes are important.

When the Founders of our great nation enshrined the protection of the individual right to keep and bear arms in the 2nd Amendment to the Constitution, they did so for a single reason: to preserve the ability of the people to throw off a government that has become despotic.

When the Bill of Rights was written, the American experiment in self-governance was still in its infancy. The soldiers’ wounds were still healing from the long war of secession from the Great Britain and the dead were still being mourned by their families. Newly minted Americans had paid a heavy price to throw off one despotic government and knew that it would take just as much blood if they had to do it again.

The Right to Keep and Bear Arms does not exist for the purpose of hunting, shooting sports, or even self-defense. It exists, as the Declaration of Independence says, so that, “when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government.” Throwing off a government requires an armed populace, which is why every tyrannical regime in the history of humankind has disarmed its citizens.

Americans are free because they are armed, and they are armed because they are free.

One of the principal powers granted to any government is the power to tax. At its best, a good government will collect taxes from the citizenry and use it for things that are for the general good, and for which the private sector is ill-equipped to do. The obvious things that fit this kinds of use of tax dollars are the military, law enforcement, large infrastructure needs, border enforcement, etc. At its worst, a bad government will collect taxes from the citizenry and use them to enrich favored people, oppress other people, or just waste the tax money. Welfare, corporate cronyism, wasteful government spending, etc. are examples of bad governance.

A totalitarian government can be a good government, but it is illegitimate without the consent of the governed. Conversely, a representative government can be a bad government when a tyranny of the majority fleeces a minority for its own gain.

In a totalitarian government, the power to tax is absolute and people must pay what the autocrat demands, or suffer consequences ranging from confiscation to imprisonment to death. In a representative government, the only difference is that it is not a single autocrat demanding the tax, but the majority of citizens. The consequences of refusing to pay a tax in a representative government is the same as in a totalitarian government.

Governments, whether totalitarian or representative, are the only entity in a civil society with the legal power to commit violence. That violence is directed against enemies of the nation in the form of a military, and it is directed against citizens of the nation who disobey the laws set forth by the government. The power of government is based on applied violence.

Oppressive taxes are not only a drain on our economy and fuel for bad government, but it siphons the ability of individuals to pursue their own happiness. Every dollar a government spends is a dollar that was taken from someone who can no longer use it for their own needs and wants.

Over the next several years, we can expect the Evers Administration to make a strong push to restrict gun rights and raise taxes. State legislators and the citizens of Wisconsin must see through the toxic rhetorical gas and fight for principles of more gun rights and less taxes.

School Districts Fight to Avoid Tax Cut

by | 0843, 18 Oct 1818 | , | 7 Comments

From MacIver

[Madison, Wisc…] Homeowners in 148 school districts across Wisconsin will be getting an unexpected tax cut next year, but many of those districts would prefer to keep that a secret – and backfill those savings with new spending.

The reason for the tax cut is the termination of the Energy Efficiency Exemption (EEE). This loophole allowed school districts to raise taxes for supposed energy efficiency projects without going to referendum.

The energy savings on many of these projects is negligible. It will be decades before the savings justify the expense – which was considerable. Last year alone, districts collected an additional $92.3 million through the EEE. With the program eliminated, property taxes in those 148 school districts will automatically drop $92.3 million.

However, 21 of those districts see this as an opportunity to downplay the true tax impact of their referendums on next month’s ballot. For example, the Hartford J1 School District has a referendum for $5.5 million. According to the district’s website, “If the referendum is approved, there would be no impact on current school tax rates over the life of the 15-year borrowing term.”

Southern Door County Schools has a $6,270,000 building referendum that “would not increase your taxes over current levels.”

The Edgerton School District has been more transparent about this tactic than most. It’s trying to convince local residents that a $40.6 million building referendum plus a $1.25 million recurring annual operating referendum will only raise their tax rate by less than a dollar. The finance director, Todd Wehner, openly describes this tactic as a “levy opportunity or a levy shelf.”

Close the dark store loophole

by | 0910, 17 Oct 1818 | | 0 Comments

Here is my full column that ran in the Washington County Daily News yesterday.

If you are voting in West Bend, be sure to turn over your ballot. Like many municipalities in Wisconsin, West Bend’s voters are being asked to weigh in on whether or not the state Legislature should close the so-called “dark store loophole” in the property tax laws. The question is: “Should the state Legislature enact proposed legislation that closes the Dark Store loopholes, which currently allow commercial retail properties to significantly reduce the assessed valuation and property tax of such properties, resulting in a substantial shift in taxes levied against other tax paying entities, such as residential home owners, and/or cuts in essential services provided by an affected municipality?”

At issue is how commercial properties are valued for the purposes of property taxes. In a pure sense, the value of anything is the price that a willing buyer is willing to pay to a willing seller. For tax purposes, the government must assess what that price might be.

Residential properties are relatively easy to assess. Based on the condition, size and location of a house, the assessor can compare it to similar houses that have recently sold and come up with a reasonable price. Assessing the value of commercial properties is far more difficult and much more subjective than residential properties. There are at least five common, but different, ways to calculate the value of commercial property for tax and accounting purposes.

In Wisconsin, government assessors have generally set the value of commercial real estate based on how much the property is worth based on the property being occupied and generating revenue for the owners. For example, a retail store in a great location that generates millions of dollars for the owners is worth quite a bit to the owner — even if the property would not be worth as much to a different owner.

In recent years, several of Wisconsin’s largest commercial property owners like Walmart, Menards, Walgreens, etc. have been suing municipalities to have the value of their properties lowered based on the “dark store” method of valuation. Under this method, the value of the property is calculated based on what it would be if the store were empty. In other words, the companies want the value of the property to be set at what that they think they could sell it for if they closed up shop and left. Commercial property owners have been winning appeals of their property assessments under this theory across Wisconsin and drastically lowering their property tax bills.

Both valuation methods are equally valid, in an economic sense, but have vastly different outcomes for Wisconsin. As more commercial properties are valued under the dark store valuation method, they are paying far less in property taxes. The result is that local governments must either reduce spending to account for the reduction in taxes being collected, or shift the property tax burden to residential propertyowners.

Let’s look at one small example. In West Bend, Walgreens’ two stores were once valued at $14 million. Last year, Walgreens appealed under the dark store theory and won, thus reducing the combined assessed value of the two properties to $4.8 million. That change in value reduced Walgreens property tax obligation by a whopping $180,000 per year. Each of the local governments that rely on property taxes for funding now have to find a way to fill that hole. Multiply this equation by dozens or hundreds of commercial properties in each municipality in Wisconsin and the hole becomes impossible to fill.

While there are several perfectly rational and valid ways to determine the value of commercial properties, Wisconsin needs to determine a uniform and fair way that will be used for the purpose of property taxes. Closing the dark store loophole is a good step toward that goal.

Close the dark store loophole

by | 0741, 16 Oct 1818 | | 1 Comment

My column for the Washington County Daily News is online. Here’s a taste:

At issue is how commercial properties are valued for the purposes of property taxes. In a pure sense, the value of anything is the price that a willing buyer is willing to pay to a willing seller. For tax purposes, the government must assess what that price might be.

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