September 22, 2014

At odds over Internet sales tax

Competing arguments on Internet sales taxes were in focus Monday. At a Capitol media briefing, Pete Sepp with the National Taxpayers Union said polling finds voters in Wisconsin strongly oppose out-of-state tax collection on the state’s online merchants.

The survey of 400 likely voters was conducted from June 3rd to the 5th, and found that Wisconsin residents opposed, by a 63 to 30 percent margin, the Marketplace Fairness Act. The federal legislation would allow revenue agencies in one state to collect internet sales taxes in another state.

Sepp said the prospect of additional revenues could be a double-edged sword for states. “Every state revenue department that thinks this is a good idea because suddenly revenues will come flowing back to their states, they need to realize this works 45 other ways,” he said, referring to the 45 states which currently collect sales taxes.

The U.S. Senate has passed the Marketplace Fairness Act, also known as e-fairness legislation, but the House has not acted on the measure. “Whether you sell on-line or, whether you sell as a brick and mortar outfit, you collect and submit the tax for where you are located,” said Sepp. “That’s fair, isn’t it?”

“We right now have a ridiculous tax policy that harms Wisconsin businesses,”said Alliance of Wisconsin Retailers executive director Scott Stenger. “It says we’re going to give a benefit to an out-of-state business that employs nobody (in Wisconsin), pays no taxes. We’re going to give them an advantage over a Wisconsin-based business that employs thousands of people and pays taxes. E-fairness legislation simply closes a tax loophole that allows out-of-state companies to avoid collecting sales tax – something the government forces all businesses in Wisconsin to do.”

Wisconsin’s tourism industry increases $700 million

Wisconsin Department of Tourism Secretary Stephanie Klett has a lot of numbers, and it’s all good.

“We have great news to report, and that is, Wisconsin Tourism is up $700 million from 2012 to 2013. So that’s a 4 percent increase. Our total visitor spending was $17.5 billion.”

Visitor growth last year was the fastest since 2010. A new study finds visits to the Badger State increased 3.5 percent in 2013 to more than 100 million.

Klett says Wisconsin attracts tourists from other states and across the globe, but many big spenders are right here in our own back yard. “Fifty-one percent of people who vacation in Wisconsin are from Wisconsin … and then 49 percent are coming from all across the world, literally.”

AUDIO: Klett explains how Wisconsin benefits from free publicity. :35

In order to make money, one has to spend money, that’s called a return on investment. For every $1 the agency spent on advertising last fall and summer, $6 was returned to the state in the form of tax revenue.

With a little creativity, advertising can be free. It’s called “earned media.” Klett explains, by reuniting the cast of airplane for the summer ad campaign, the state earned a lot of free publicity.

“Our earned media for that was $35 million. Our marketing budget is just $12.5 million. So, in 2013, we had $70 million of earned media when the average state gets $17 million.”

That commercial is scheduled to begin airing on TV the week of May 12th .

Wisconsin tourism supports nearly 185,000 jobs and $4.6 billion in personal income. Visitors generated $1.35 billion in state and local revenue last year, and $1 billion in federal taxes. Each household in Wisconsin would need to be taxed an extra $590 a year to replace those tourism taxes.

AUDIO: Jackie Johnson report 1:14

Tax Freedom Day in Wisconsin

It’s Tax Freedom Day in Wisconsin, the day on which Badger State taxpayers have collectively earned enough income to pay off their total federal, state, and local tax bill. Wisconsin is the 37th state to reach Tax Freedom Day. According to the annual report from the nonpartisan Tax Foundation, national Tax Freedom Day falls on April 21, three days later than last year.

The states with the earliest Tax Freedom Days are Louisiana (Mar 30), Mississippi (Apr 2), and South Dakota (Apr 4). The latest dates fall in New Jersey (May 9), Connecticut (May 9), and New York (May 4).

The study’s key findings include:

  •  The national Tax Freedom Day is three days later than last year due mainly to the continuing economic recovery, which will boost federal tax revenue collected through the corporate, payroll, and individual income tax.
  •  Americans will spend more on taxes in 2014 than they will on food, clothing, and housing combined.
  •  Americans will spend 42 days working to pay off income taxes, 15 days for excise taxes, and 11 days for property taxes.
  •  Americans will pay $3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.5 trillion, or 30.2 percent of the nation’s income.
  •  If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur on May 6, 15 days later.

Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden. Tax Foundation Economist Kyle Pomerleau said Tax Freedom Day provides “a vivid representation of how much we pay for the goods and services provided by governments at all levels.”

Historically, the date for Tax Freedom Day has fluctuated significantly. The latest-ever nationwide Tax Freedom Day was May 1, 2000. In 1900, Tax Freedom Day came on January 22.

 

Wisconsin ranks fifth for smuggled smokes

About one of every three packs of cigarettes sold in Wisconsin are either counterfeit or are not taxed properly, according to the Tax Foundation. The groups says the Badger State is the nation’s fifth-largest importer of smuggled cigarettes.

A new report from the group says 34.6 percent of Wisconsin’s cigarettes were not taxed, were taxed improperly, or were counterfeit. New York is the highest, followed by Arizona, New Mexico, and Washington state.

Joseph Henchman of the Tax Foundation blames the new smuggling on a big gap between low-tax and high-tax states. Three of every five states have raised their cigarette taxes to discourage smoking. Wisconsin increased its cigarette tax from $0.77 a pack to $2.52 between 2007 and 2009, while many neighboring states have seen slower increases. Illinois’ cigarette tax is currently $1.98, outside of the Chicago area.

Henchman says those policies often have “unintended consequences that outweigh their benefits,” such as encouraging counterfeit tax stamps, fake versions of legitimate cigarette brands, trucks that are hijacked, and officials who look the other way.

Assessing impact of tax cuts

Governor Scott Walker signed his package of tax cuts into law in a ceremony at a Shawano County farm on Monday. It includes more than $500 million in property and income tax cuts. The governor’s office has said that the average Wisconsin homeowner can expect to see $100 reduction in 2014 property taxes.

The bill also adjusts withholding for state income taxes. Beginning in April, a typical household with two working parents can expect to see $55 in their paychecks, according to Walker.

The tax cuts were proposed after the state reported a surplus of more than $900 million. When it comes to assessing the impact of the tax cuts, Todd Berry with the Wisconsin Taxpayers Alliance says it’s important to remember that things can change.

“When we went into recession in 2008, about $800 million of expected tax revenue disappeared in a matter of months, if not week. Surprises can come rather quickly,” Berry said. “The thinking is that we will now end this biennium with a surplus of a little over $100 million, which to be honest is a lot to the average person but in a budget of $15 billion it’s not much of a cushion.”