Milwaukee: Great for Corporations
But property taxpayers get squeezed
Two new reports are fueling the debate about whether Wisconsin—or Milwaukee in particular—is a “tax hell” that drives away businesses or whether corporations receive tax breaks that individuals don’t. A new Public Policy Forum study found that property taxes rose 6% in southeastern Wisconsin last year, an increase shouldered by individual homeowners and renters.
Yet the international accounting firm KPMG gave Milwaukee favorable rankings for the city’s corporate tax structure. KPMG found that Milwaukee’s total taxes paid by corporations are 4% below the national average.
Corporations in Phoenix, Charleston, S.C., Minneapolis, Denver, Las Vegas, Portland, Ore., Chicago, Seattle, San Diego and New York pay more taxes than they do in Milwaukee.
Karen Royster, executive director of the Institute for Wisconsin’s Future (IWF), said she wasn’t surprised by the KPMG findings, even though they refute the “tax hell” claim made by business groups such as Wisconsin Manufacturers & Commerce (WMC) and conservative politicians.
“It’s such a mantra for the WMC and some corporate leaders to talk about Milwaukee and Wisconsin trying to chase business away [with their tax policies],” Royster said. “Really, the opposite is true. The state and city have bent over backwards to have a favorable tax structure.”
Ironically, Milwaukee’s favorable tax structure didn’t encourage Miller-Coors to locate its new headquarters here. Instead, the brewing company is locating to Chicago, where corporate taxes are 5% above the national average.
Wisconsin’s Corporate Tax Breaks
to the “tax hell” argument, Royster said corporations in Wisconsin
enjoy tax breaks not given to individuals. Corporations don’t pay
property tax on machinery and equipment, including computers.
Businesses that don’t make a profit don’t pay corporate income taxes,
and many profitable businesses are able to use complicated accounting
methods to avoid paying income taxes in Wisconsin.
IWF’s research found that more than 60% of the largest corporations pay no income tax in Wisconsin at all, although small, locally owned businesses are paying their fair share.
“It’s frustrating that huge corporations such as Microsoft, Merck pharmaceuticals and McDonald’s are paying less income tax than you and I,” Royster said. Ernst & Young data show that if Wisconsin required corporations to pay taxes at the national average for state taxes, the state and local governments would bring in an additional $1.6 billion in revenue each year. What’s more, last month the state Supreme Court delivered a huge tax break to corporations that purchase customizable computer software. That decision will turn into a $265 million-plus-interest tax refund for businesses, and fewer revenues for the state in the future.
But individuals aren’t enjoying the same tax breaks given to corporations. The Public Policy Forum study found that property taxes jumped 6% in 2007, a cost that has a direct impact on individual homeowners and renters. Much of that increase was due to school property tax collections, including local public referenda supporting increased school spending.
State aid to schools hasn’t kept up with the rising costs of operating fully functioning school systems, Royster noted.
“Then you are forced to go to the property taxpayer to make up for the lack of state aid,” Royster said.