It’s not too late for Governor Doyle to give the two-fingered eye poke to Big Business’s single sales factor tax break.
Corporate stooges
By
Roger Bybee
In one of the most gripping and politically significant "Three Stooges" episodes of all time, Moe, Larry and Curly find themselves trapped in a leaky boat sinking in deep water.
While Larry and Moe frantically bail water out of the boat, the ever-creative Curly finds a drill and calls it a “water-letter-outer." Chortling " Nyuk! Nyuk! Nyuk!" Curly begins drilling "to let the water out" of the bottom of the boat, and cannot believe what he is seeing when new gushers of water spout into the boat and threaten to sink it even faster.
Back in the real world, Wisconsin 2003, Democratic Governor Jim Doyle has moved into the East Wing just in time to try to bail the state out of a $3.2 billion deficit that gushed in after 16 years of Tommy Thompson and Scott McCallum.
Meanwhile, the Curlys, Moes and Larrys in the Republican-dominated Legislature are promoting a water-letter-outer called single sales factor corporate income tax apportionment, designed by Big Business lobbyists in Washington, D.C. The single-factor system will allow the state’s biggest corporations to further reduce their puny tax burden. It will cost Wisconsin at least $45 million a year at a time of service cuts, public-employee layoffs, a $250 million cut to the university system, an 18 percent tuition increase and higher co-pays for the elderly seeking relief from extortionate drug prices via SeniorCare.
The Big Business tax break will actually save the biggest companies $85 million a year, but $40 million will be made up for with tax increases on smaller businesses. Nice.
Even Tommy Thompson, always eager to pay back his corporate sponsors, turned away the single-factor tax break during much better financial times, because corporate leaders were unwilling to link it to a combined reporting reform that would make it harder for multi-state corporations to avoid state taxes. At this point, only Texas and Iowa have been foolish enough to swallow the single-factor tax without the counterbalance of combined reporting.
Yet now, in the midst of what is probably Wisconsin's worst fiscal crisis since the Great Depression, Doyle has announced that he is in favor of the Republican tax cut for Big Business. This, at a time when Wisconsin corporations pay just one-fourth the share of state taxes that they did in 1969 because their strategic campaign contributions and lobbyists have negotiated a slew of tax breaks and loopholes in the last few decades. Doyle declined to review those breaks and loopholes in his 2003-2005 budget.
Doyle could have used the budget crisis to point out the unfair impact of service cuts and tuition and fee increases, and draw attention to the inequities and imbalances in our tax system. He could have told reporters and citizens that a wide variety of evidence—studies of corporations location decisions, frank comments by corporate executives, and the sad experience of states that have been abandoned by corporate beneficiaries of special incentives—shows the single-factor tax will do nothing to lift Wisconsin out of recession.
This is one of those "educable moments" when people are paying attention to budget and tax matters and might be more receptive to messages they would otherwise ignore.
New Jersey Governor Jim McGreevey used an identical opportunity this spring to ram home an increase in casino taxes. McGreevey denounced "millionaire casino CEOs" for trying to shirk their share of the burden in facing New Jersey’s budget crisis. "When the casinos pick a fight with New Jersey's working families they've chosen the wrong targets," he declares in a TV ad. "That's why I'm fighting to put the odds on our side."
Imagine Doyle traveling the state to visit the 11 major banks (out of the 15 largest) that are not paying any corporate income taxes. Picture Doyle in front of Kohl's Department Store cutting an ad that draws attention to the fact that Kohl's uses a loophole to avoid paying corporate income taxes.
Short of that, it is still not too late for Doyle to simply eliminate the single sales factor plan from this budget and admit that his previous statements on the issue were wrongheaded or premature. That kind of humility is hard for most elected officials, but the alternative, in this case, is a big two-fingered eye poke to students, seniors, small business and all of Wisconsin’s taxpayers.
July 13, 2003
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Roger Bybee is a Milwaukee-based writer and consultant.
