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.
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.
There is still time to apply for an absentee ballot in Wisconsin. You must complete the proper form and mail it to or turn it into your municipal clerk's office. The application must be received by 5:00 this Thursday, the Thursday before the election in order for an absentee ballot to be mailed to you.
Here are instructions on how to apply for an absentee ballot in Wisconsin.
During May, I blogged about the trend of voting via the Post Office. As one election official put it, “There is no line at your mailbox.” Just how popular is the absentee ballot? The Associated Press reports that nationwide, about a third of the electorate is expected to vote before Election Day, November 4, 2008.
The numbers show an increasing percentage of voters want to take advantage of the absentee ballot because they are travelling, they are elderly and have difficulty getting to the polls, the convenience of considering their choices in the comfortable confines of their home, or simply because they can. Twenty-eight states, including Wisconsin, allow anyone to vote absentee, no questions asked.
During 2000, 16 percent of voters in the United States cast their ballots early. The number increased to 22 percent in 2004.
Statewide in Wisconsin, according to the Government Accountability Board’s Kyle Richmond who was quoted by the Associated Press, about 365,000 people used absentee ballots or cast early votes at clerk’s offices in 2004, about 12 percent of the voting age population in the state. The number is expected to grow this year to 15 percent.
At least 40% of California’s registered voters already have decided they want to vote by mail. The LA Times reports that according to the Early Voting Information Center at Reed College in Portland, Oregon, a majority of voters prefer their mailbox over the ballot box in Nevada, New Mexico, Arizona and Colorado. Oregon did away entirely with polling places during 2000. Washington state is getting close to 100% vote-by-mail.
Here is an Associated Press story on the popularity of Post Office voting.
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.
Under Wisconsin law, employers must allow workers time to vote on Election Day. Here is the Wisconsin statute:
6.76 Time off for voting.
(1) Any person entitled to vote at an election is entitled to be absent from work while the polls are open for a period not to exceed 3 successive hours to vote. The elector shall notify the affected employer before election day of the intended absence. The employer may designate the time of day for the absence.
(2) No penalty, other than a deduction for time lost, may be imposed upon an elector by his or her employer by reason of the absence authorized by this section.
(3) This section applies to all employers including the state and all political subdivisions of the state and their employees, but does not affect the employees’ right to holidays existing on June 28, 1945, or established after that date.
History: 1977 c. 394; 1991 a. 316.