May 19, 2013

Sales tax hike of 160 percent?

It’s something Governor Scott Walker “is considering,” according to Wisconsin Department of Administration Secretary Mike Huebsch. “For the first time in, I would say the last 20 years, this is getting much more discussion across the nation. And I think it’s being led by governors like Bobby Jindal in Louisiana who are trying to figure out ways that they can eliminate their income tax. That’s really the motivation here. They want to eliminate the income tax.”

Raising the sales tax is an idea some folks are talking about, but Huebsch says “the honest and in depth discussion of that is just beginning in Wisconsin,” though he says, “It’s about to hit the front pages.”

The state sales tax rate is currently 5 percent; Huebsch says adding 8 cents would allow the state to eliminate income taxes. ”If we were just going to eliminate the income tax and raise our sales tax to match that, we would have to raise it somewhere in the neighborhood of about 8 cents. We would have to go to about 13, maybe 13 1/2 cents in our sales tax.” Individual income taxes equaled $7.0 billion in 2012 in Wisconsin.

If the sales tax were to be expanded to items that are currently exempt, the proposed increase wouldn’t be as much. Food is not taxed right now and it’s “highly unlikely” it will be put on the table for consideration. Huebsch says there needs to be a discussion about whether to tax consumption or production — sales versus income.

Huebsch made his comments to a group of leaders from throughout the state, who were convening in Madison for a Wisconsin Counties Association Legislative Exchange. Governor Walker is scheduled to address the crowd Wednesday morning at 9:15 at the Concourse Hotel.

AUDIO: Jackie Johnson report 1:25

UPDATE: Walker disclaims plans to hike sales tax

Getting help with those taxes

Help is once again available for taxpayers who may have questions about their returns. State Department of Revenue Secretary Rick Chandler says Volunteer Income Tax Assistance and Tax Counseling for the Elderly sites will be opening around the state in the coming months.

The sites are designed for individuals of low to moderate income, seniors, the disabled, and members of the military. There will be about 200 locations operating around the state through the end of tax season.

AUDIO: Sec. Rick Chandler (:15)

Chandler says many people appreciate having the trained volunteers available, since they may not have easy access to a computer or may just be intimidated by the process.

Those interested in using the sites can check the Department’s website or just call 211 for a list of locations in their area.

Tax season has arrived

State and federal officials are now accepting individual income tax returns, and officials remain hopeful that more people will continue choosing to file electronically this year.

Wisconsin Department of Revenue Secretary Rick Chandler says the agency is continuing its push to get people to use the state’s e-file system. He says the online system provides a fast, accurate, secure, and easy way for people to prepare their return.

AUDIO: Sec. Rick Chandler (:14)

The system also dramatically cuts costs for the state to process returns and can speed up the turnaround time for issuing any refunds. Chandler says most individuals can use the e-file system, unless they have a more complex return.

About 80 percent of individual taxpayers in Wisconsin used e-file last year. Chandler says the system has seen dramatic growth over the past decade, when only about 25 percent of taxpayers filed electronically.

Chandler says you will need copies of documents such as W-2 forms, property tax bills, and bank account information. You will also need to complete your federal return first.

The state also continues to remind taxpayers to make sure they report use tax owed to the state. The tax applies to purchases made online from vendors who do not charge Wisconsin sales taxes. There is a line item on the tax form to report total purchases, and individuals will end up owing about five percent on that number.

AUDIO: Sec. Chandler (:12)

Tax forms are due to DOR and the IRS by April 15th.

State tax collections rose in 2012

Tax collections are up in Wisconsin, but a new report shows that the impact on taxpayers actually went down last year.

Wisconsin Taxpayers Alliance president Todd Berry says state and local governments collected nearly $27 billion in taxes last year, which is an increase of 3.2 percent. The tax burden fell slightly though because personal incomes rose by 4.5 percent, which means fewer people felt the impact of those higher taxes on the money they bring home.

Berry says the relief came largely from local governments, which only saw tax collections increase by an average of about a half percent. State taxes collections went up almost five percent.

Berry notes that state and local taxes come from very different sources. The state relies largely on income and sales taxes, which typically increase as the economy goes up. Local governments draw primarily on property taxes, which face strict limits on increases that have been imposed by the state.

AUDIO: Todd Berry (:22)

Berry says federal taxes proved to be a much bigger burden for many Badger State residents, with Wisconsinites paying nearly $40 billion to the federal government last year.

Rick Schuh, WHBY

Earned Income Tax Credit a boon to working families

The IRS wants to make sure working families are aware of a credit they may be eligible for . Christopher Miller with the IRS in Milwaukee says the Earned Income Tax Credit can make a real difference for working families. “Last year about 383,000 families in Wisconsin received about $790 million in EITC, and the average check was just over $2000,” Miller says.

Miller says about a third of the people eligible for the EITC changes every year, for a variety of reasons, which is why the IRS makes an annual effort to make people aware of the credit.

“We know that generally speaking, 4 out 0f 5 eligible workers claim and get this EITC,” Miller says, “That still means, of course, that we’re missing somewhere in the neighborhood of 20 to 25 percent of the people.”

Even single people without kids can qualify for the credit, as well as grandparents taking care of grandchildren. Friday is Earned Income Tax Credit Awareness Day.

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