Two new reports are fueling the debate about whether Wisconsinor Milwaukee in particularis 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 internationalaccounting firm KPMG gave Milwaukee favorable rankings for the city’s corporate tax structure. KPMG found that Milwaukee’s total taxes paidby corporations are 4% below the national average.
Corporationsin Phoenix, Charleston, S.C., Minneapolis, Denver, Las Vegas, Portland,Ore., Chicago, Seattle, San Diego and New York pay more taxes than theydo in Milwaukee.
Karen Royster, executive director of theInstitute for Wisconsin’s Future (IWF), said she wasn’t surprised bythe KPMG findings, even though they refute the “tax hell” claim made bybusiness groups such as Wisconsin Manufacturers & Commerce (WMC)and conservative politicians.
“It’s such a mantra for the WMCand some corporate leaders to talk about Milwaukee and Wisconsin tryingto chase business away [with their tax policies],” Royster said.“Really, the opposite is true. The state and city have bent overbackwards to have a favorable tax structure.”
Ironically,Milwaukee’s favorable tax structure didn’t encourage Miller-Coors tolocate its new headquarters here. Instead, the brewing company islocating to Chicago, where corporate taxes are 5% above the nationalaverage.
Wisconsin’s Corporate Tax Breaks
Contraryto the “tax hell” argument, Royster said corporations in Wisconsinenjoy tax breaks not given to individuals. Corporations don’t payproperty 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 accountingmethods to avoid paying income taxes in Wisconsin.
IWF’sresearch found that more than 60% of the largest corporations pay noincome tax in Wisconsin at all, although small, locally ownedbusinesses are paying their fair share.
“It’s frustrating thathuge corporations such as Microsoft, Merck pharmaceuticals andMcDonald’s are paying less income tax than you and I,” Royster said.Ernst & Young data show that if Wisconsin required corporations topay taxes at the national average for state taxes, the state and localgovernments would bring in an additional $1.6 billion in revenue eachyear. What’s more, last month the state Supreme Court delivered a hugetax break to corporations that purchase customizable computer software.That decision will turn into a $265 million-plus-interest tax refundfor businesses, and fewer revenues for the state in the future.
Butindividuals aren’t enjoying the same tax breaks given to corporations.The Public Policy Forum study found that property taxes jumped 6% in2007, a cost that has a direct impact on individual homeowners andrenters. Much of that increase was due to school property taxcollections, including local public referenda supporting increasedschool 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.
What’s your take? Write: editor@shepex.com or comment on this story online at www.expressmilwaukee.com.
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