State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.
In South Dakota, voters will decide on an abortion ban and term limits. Merit pay for teachers is on the ballot in Oregon. Maryland will decide whether to approve slot machines. There are marijuana questions before voters, where else, in California.
A host of referendum and initiative questions are on ballots all across the country this Election Day. Here is the rundown.
Wisconsin’s business tax climate continues to be one of the worst in the country. The nonpartisan Tax Foundation in Washington D.C. has released its 2009 State Business Tax Climate Index, ranking Wisconsin number 38 (Wisconsin was number 39 last year). The annual study is significant because it demonstrates how states compare to one another in competitiveness.
Here are the five specific areas the Tax Foundation reviewed in each state to come up with its Index and how Wisconsin scored on each: corporate taxes (29), individual income taxes (44), sales taxes (18), unemployment insurance taxes (25), and property taxes (31).
American companies confront a double-whammy. They pay one of the highest corporate tax rates of any of the industrialized nations. The top federal rate on corporate income is 35 percent. On top of that, some states institute harsh tax systems that make competition difficult. Companies will go where they have the best advantage. As the Tax Foundation correctly reports, “States with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth.”
While booming job creation overseas can’t be overlooked, the U.S. Department of Labor reports most significant job relocations are from one state to another. A state like Wisconsin must be more concerned about jobs moving to Indiana (Business tax climate number 14), Michigan (number 20) or Illinois (number 23) than India or China.
The ten states with the best business tax climates are, in order, Wyoming, South Dakota, Nevada, Alaska, Florida, Montana, Texas, New Hampshire, Oregon, and Delaware. Wyoming, Nevada and South Dakota do not have corporate or individual income taxes. Alaska does not have individual income or state-level sales taxes. Florida and Texas do not have individual income taxes. New Hampshire, Delaware, Oregon and Montana do not have sales taxes. States that are able to draw adequate revenue without one of the major taxes will be more competitive than states that impose every possible tax.
Some factors contribute to Wisconsin’s poor ranking. The income level at which a state’s top rate kicks in determines what amount of income is subject to the top rate. Wisconsin scores badly here because it is one of the states that has arranged its multiple tax brackets so that the top rate takes effect in the middle range of income ($152,140).
Wisconsin has an Alternative Minimum Tax (AMT) that is modeled after the federal AMT. The Tax Foundation says the AMT is, “an inefficient way to prevent tax deductions and credits from totally eliminating tax liability,” that puts states like Wisconsin through, “needless tax complexity.”
Then there is our gas tax, the fourth highest in the country at 32.9 cents. Because gasoline constitutes a large expense, states with lower gas taxes are more competitive.
How can states like Wisconsin improve their business climates? What about tax incentives and subsidies? The Tax Foundation’s position and I concur, is that, “if a state needs to offer such packages, it is most likely covering for a woeful business tax climate. A far more effective approach is to systematically improve the business tax climate for the long term so as to improve the state's competitiveness.”
Surely, other factors play a role in a state’s business climate including how close it is to raw materials and transportation centers, the quality of schools, the skill of its workforce, and the state’s quality of life. Some of these areas lie beyond the scope of state lawmakers to directly control. However, legislators can make policy decisions that directly impact a sate’s tax system, and thus, the state’s business climate.
I agree with the Tax Foundation that writes:
“Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system, and the long-term health of a state's economy. Most importantly, taxes diminish profits. If taxes take a larger portion of profits, that cost is passed along to either consumers (through higher prices), workers (through lower wages or fewer jobs), or shareholders (through lower dividends or share value). Thus a state with lower tax costs will be more attractive to business investment, and more likely to experience economic growth.”
The best tax system is one that is simple and fair to all businesses that shuns excessive business taxes and keeps costs for adhering to the system down. Until Wisconsin adopts policies to enable a business climate that encourages growth, it will continue to have problems competing.
You can find the 2009 State Business Tax Climate Index here.
I’m not talking about the frigid cold or heavy snow. I’m talking about rough travelling conditions due to a shortage of road salt.
The Appleton Post-Crescent reports, “Dave Vieth, director of the state's bureau of highway operations, said the state purchased an amount about 40,000 tons short of what it requested during an early-year buy. It plans to increase the use of additives to stretch supplies and truck salt from different parts of the state as necessary.”
Why the shortage? In a nutshell, demand is high, supplies are down, and costs are up. The Post- Crescent reports, “Road salt prices now range as high as $250 per ton in the upper Midwest, and some would-be buyers are finding it hard to come by at any price.” It could have been worse, but Wisconsin, unlike some other states, put in bids for road salt early.
One state official told road maintenance supervisors to use only enough salt to “keep the snow plowable,” as well as anti-icing and de-icing additives.
Heavy snowfall last winter resulted in the United States dumping a near-record 20.3 million tons of salt.
Here are more details from the Appleton Post-Crescent and USA Today.
Wisconsin’s highly-acclaimed Legislative Audit Bureau (LAB) has released two audits about the Wisconsin Health Insurance Risk-Sharing Plan (HIRSP) Authority. The HIRSP Authority offers medical and prescription drug insurance for those unable to obtain coverage in the private market or who have lost employer-sponsored group health insurance.
Financial records of the HIRSP Authority for the final six months of 2006 and all of calendar year 2007 were reviewed. The LAB did not find what it called, “significant concerns,” but it does advise that the HIRSP Authority work with the federal government to settle a federal cash management issue.
Every quarter, the HIRSP Authority should remit to the federal government interest earned on advances of federal funds. The LAB found that a $4,422,935 grant was awarded to Wisconsin for HIRSP during September 2006 by the Centers for Medicare and Medicaid Services (CMS) in the U.S. Department of Health and Human Services under a grant program. The entire amount was drawn by the Wisconsin Department of Administration (DOA) during November 2006 and transferred through the Wisconsin Office of the Commissioner of Insurance (OCI) to the HIRSP Authority during the first week of January 2007.
The LAB reports the HIRSP Authority had spent only $2,333,710 of the federal grant when it received the funds during January 2007. The remaining $2,089,225 was spent from January through June 2007. The HIRSP Authority did not remit to CMS any interest earned on the federal funds it received.
How could that happen? The LAB explains that there was a change in the administration of HIRSP effective July 1, 2006. Control was transferred from the Wisconsin Department of Health and Family Services to the HIRSP Authority effective July 1, 2006. Prior to that time, OCI received federal funds to be paid to the HIRSP Authority. State law was then changed to allow federal grant funds to go directly to the HIRSP Authority. As a result, the LAB reports, “the HIRSP Authority may owe interest to CMS on the advance of $2,089,225 it received in January 2007. Potential interest earnings on those funds are estimated to not exceed $33,000 for the period January through June 2007.”
The LAB writes that when the administration of HIRSP changed, staff members at the HIRSP Authority were unaware of and not informed about the cash management requirements. The audit recommends that the HIRSP Authority work with CMS, DOA, and OCI to resolve this issue and take measures to meet federal cash requirements in the future.
I commend the LAB for their consistently outstanding work. You can read their audits here and here.