Now is the time to start talking about reforming the tax system and writing a budget that helps people instead of corporations.
One loophole at a time
By
Sen. Gwen Moore
(Editor’s note: Sen. Gwen Moore's September 6th Fighting Bob Fest speech addressed many of the issues and themes she covers in this FightingBob.com article. This is the seventh in a series of articles FightingBob.com will post from Fighting Bob Fest speakers.)
The budget has been passed and signed, but as far as I am concerned the budget debate is never over when there are a lot of people hurting and a $3.2 billion deficit. We have to start thinking about the next budget now if we hope to have a better one next time around. As it is, some of the people in my district cannot wait until the next budget.
To paraphrase Jesse Jackson, I represent the desperate, the damned, the disinherited, the disrespected, and the despised. That is Wisconsin’s 4th Senate District. And let’s just say most of the legislative and budgetary action in recent years was not taken with the people in my district in mind.
Rather, elected officials on both sides of the aisle have been busily crafting new and better loopholes, tax breaks, handouts and special favors for big corporations, leaving the rest of us to pick up the slack and fight over the crumbs.
A recent series in the Capital Times revealed that 11 of our state’s largest 15 banks pay no income taxes. For the purposes of avoiding Wisconsin taxes, banks and big corporations set up their corporate entities in states like Nevada where there is no corporate income tax. This one loophole adds up to more than half a billion dollars a year in lost revenue for Wisconsin.
There was a rush to support the Republicans in providing the single sales factor tax break. This break will mean at least $90 million in lost tax revenue from the state’s largest and wealthiest corporations. That great progressive, former governor Tommy Thompson, thought it was important to not have single sales factor without the combined reporting requirements that would close those Nevada loopholes, so single sales factor never passed under his watch. Our current governor and Legislature one-upped Tommy in the corporate-favor game.
The Capital Times found that the corporate share of the state’s tax burden has declined from 11.3 percent to 4.6 percent in the last 25 years of government handouts. Individual taxpayers used to pay 47.4 percent of general-purpose revenue and now we pay 54.4 percent.
Also, a recent study by the Center on Wisconsin Strategy found that the top 1 percent of income earners in this state pay, after federal deductions, 5.9 percent of their income in taxes at a time when the middle class and the poor pay 11.3 percent. As a percentage of income, the wealthy pay barely half as much as the rest of us.
The sales tax is very regressive. But so long as we are being regressive, why are we eliminating certain items from the sales tax when we still tax things that everybody needs such as school supplies, children’s clothes, household cleaners, shampoo and toilet paper?
We do not tax beauty, barber, nail and other personal-care services, for a cost of $22.6 million a year. Pet grooming services are not taxed either, and that’s a loss of sales tax revenue of $12.6 million. We also do not tax health clubs, but that only costs $1.9 million per year. The motion picture, TV and advertising materials exemption costs $8.2 million.
Poor people cannot afford lawyers. In Milwaukee, most poor people do not even get public defenders at a time when there have also been big cuts in Legal Action. But lawyers’ and accountants’ fees are not taxed, and that adds up to another $50 million lost. So with just those five special-interest sales tax exemptions, we have more than $100 million in lost revenue.
There is a big lawsuit right now before the state’s Tax Appeal Commission. The commission’s decision is going to determine how many more corporate taxes in Wisconsin will be excused through something called royalty loopholes. Right now, according to the Wisconsin Department of Revenue, just one state corporation deducted $2.6 billion in these royalty expenses last year. Nine corporations together deducted $6.8 billion in royalty expenses on their Wisconsin tax returns in 2001.
And yet all during the off session there was a fever pitch of hearings going on throughout the state with Senators Kanavas and Stepp to determine what new tax breaks we need to provide in our fall session. Expect to see a number of bills in the midst of our $3.2 billion deficit to provide even more tax breaks to big business.
Meanwhile, there is an 18 percent unemployment rate in the city of Milwaukee, three times the national rate that has ballooned under President George W. Bush. But we are not going to have any legislation to try to fix this. That would cost too much.
When we enacted W-2, statewide about 10,000 women were kicked out of school and forced into low-paying private sector jobs. In Milwaukee alone, 6,000 women were kicked out of school. We are going to leave hundreds of thousands of women and children behind if we do not have equality of educational opportunity.
Since we are denying these opportunities primarily to women and women of color, they are going to constitute the largest number of people who are left behind in the 21st century economy. The state can just not find the money to rectify this situation. Instead, these women become one more corporate subsidy, paid low wages by the state to function as chattel in the corporate race to the bottom.
When I sit down at the budget-negotiating table I have to fight to keep childcare subsidies because, again, lack of childcare really threatens women’s ability to participate in the workforce. In every budget there is the risk of lowering the threshold at which women are eligible for childcare, and there is the constant threat of higher co-pays. With every budget there is talk of balancing it on the backs of women and childcare.
I do not think the budget should be balanced on anyone’s back, but I think we should all pay our fair share. I think those who benefit the most from our economic system should give back at least as much as those who are scraping the bottom. I think most people agree with me, but somehow our voices are not heard when it comes to writing the state budget and shaping state economic policy. That is why we all have to start speaking up now, loudly, repetitiously, and in unison.
October 23, 2003
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Gwen Moore lives in Milwaukee and represents the 4th District in the Wisconsin Senate.
