Steven Walters
The State of Politics

”CPA Caucus” Seeks Major Tax Changes

Four Republican lawmakers would simplify taxes and end some sales tax exemptions.

By - Oct 10th, 2016 01:01 pm
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Wisconsin State Capitol. Photo by Rosina Peixoto.

Wisconsin State Capitol. Photo by Rosina Peixoto.

Four Republican legislators – Reps. Dale Kooyenga and John Macco and Sens. Howard Marklein and Chris Kapenga – are quietly assembling a package of tax-code changes they want added to the next state budget, if their party keeps control of the Legislature.

In WisconsinEye interviews, Kooyenga and Macco said they have been told by party leaders to keep the package “revenue neutral,” so it neither raises nor lowers taxes overall.

That echoes statements by Republican Gov. Scott Walker, who has said any tax increase – raising the 30.9-cent per gallon gas tax, for example, or the $75 annual vehicle registration fee – must be offset by tax or spending cuts. Walker will present his 2015-17 budget early next year.

But, once you get past the “revenue neutral” mandate, Kooyenga said, “Everything is on the table.” Most tax laws were written when there were no electric cars and no internet businesses that pay no Wisconsin sales tax, he noted.

Last year, state general-fund tax collections totaled $15.09 billion, not counting gas taxes or vehicle registration fees. Personal income taxes totaled $7.74 billion (51 percent of the total); sales taxes, $5.05 billion; corporate taxes, $963 million, and cigarette taxes, $573 million. Wisconsin $2.52-per-pack cigarette tax is higher than in most states.

Kooyenga said grocers, for example, are asking for “clear guidance” on exactly which items are subject to the 5 percent state sales tax and what other items are tax-exempt. “There are ways to make this easier.”

“We’re going to shoot some sacred cows,” added Macco, referring to the billions of dollars in tax breaks and tax exemptions ladled into the tax code over decades.

Some tax-exempt services may be targeted. Among the notable tax exemptions and what a sales tax on them might raise, according to the latest state Revenue Department report:

  • Accounting services, $50.5 million a year;
  • Veterinary services, $22.9 million;
  • Beauty, barber and other personal services, $22.4 million;
  • Bottled water, $21.3 million;
  • Health clubs memberships, $19.4 million;
  • Investigation and security services, $14.5 million,
  • Funeral services (although not caskets or vaults), $12.7 million.

“If everybody comes together, and everybody is a little bit mad, it will contribute a quality dynamic that will move Wisconsin forward,” Macco said. “It’s not going to be a small thing to turn this battleship around. But it will set up the next generation of having good, consistent revenue growth into the future.”

No one is challenging two of the most popular tax breaks – taxing food, which would bring in $579 million more in sales taxes, and taxing prescription drugs, $162.6 million.

Kooyenga and Marklein are CPAs and members of the Joint Finance Committee (JFC), which will review and recommend changes to Walker’s budget before handing it to the full Legislature. Kapenga is also a CPA; Macco’s official biography lists him as a financial adviser.

Asked about his tax-reform goals, Marklein said, “The tax code in Wisconsin continues to be too complex and unique. In this next budget, I am committed to simplifying the tax code to make it easier for individuals and businesses to comply.”

Kapenga said CPA legislators like him want “a more simple and straightforward tax code, because it makes it easier for both businesses and individuals to thrive.”

Don’t discount the clout of JFC members Kooyenga and Marklein, they helped get the number of personal income tax brackets reduced from five to four, and led the fight that enacted the Agriculture and Manufacturing Tax Credit – a tax break Democrats say unfairly gives the most help to millionaires.

But don’t discount the clout of special-interest groups who want to keep their tax breaks. Each of them will hire a lobbyist, or join together to hire a battalion of lobbyists, to fight for the status quo.

And, other special-interest groups will see reopening the tax code as a chance to push for new favors.

One example: Business leaders want the $287-million personal property tax repealed, but that money helps pay for local government services. Kooyenga said the personal property tax should be repealed, but beginning to phase it out may be all that’s possible in the next budget.

Kapenga added: “Our long-term goal is to have everyone complete their tax returns on a postcard, so we need to continue eliminating unnecessary exemptions, credits, and deductions, which will also allow us to lower the overall tax rate.”

Steven Walters is a senior producer with the nonprofit public affairs channel WisconsinEye. Contact him at stevenscwalters@gmail.com

12 thoughts on “The State of Politics: ”CPA Caucus” Seeks Major Tax Changes”

  1. Rich says:

    “revenue neutral” is just a ruse for transferring the burden from one group to another. With these yahoos writing the bill, guess who will benefit and who will suffer…

  2. Begonia says:

    In theory I think this is a GREAT idea. Bottled water should not be tax exempt! I hope they push it beyond the sales tax exemptions and include other random exemptions that Wisconsin offers. But like Rich, I am skeptical of the party that currently controls the legislature and statehouse.

  3. Jake formerly of the LP says:

    Hold onto your wallets, non-rich Wisconsinites. This is the same crew that thought massive tax cuts were the amswer for a one-time surplus in 2013, which have resulted in revenue shortfalls and chronic budget deficits ever since.

    They are not to be trusted, and since they are admitting they will double down.on the same trickle-down failure, why would you ever keep.these dimwits in office?

  4. wisconsin conservative digest says:

    Under Doyle we lost 130,000 jobs during his fiefdom which made it really hard to turn round. Unless we wish to become Greece, Italy, Puerto Rico, Illinois we need to put together a plan to keep and grow our businesses in Wisconsin.
    We must keep our Seniors here they are profitable.
    My folks had only $30,000 in income, when they retired, they were forced down south, where they saved $5,000 in property taxes etc. That is big deal.

  5. Vincent Hanna says:

    Ah yes blame Doyle who hasn’t been governor for 6 years. WCD slashing taxes doesn’t keep or grow businesses. If it did Kansas would have the nation’s best economy. Instead it ranks 46th.

  6. Daniel Golden says:

    Wisconsin Conservative Digest is apparently missing large sections of his/her history books. Those would be the pages where a Republican White House and Congress refused to regulate the Banksters and Greedy Billionaires, leading to the greatest economic catastrophe since the Great Depression. Governor Doyle had the misfortune to have his tenure coincide with the Bush -Cheney economic collapse. Why is it that Governor Walker blames Wisconsin’s current poor performance on Obama, but no member of the Republican Cult sees any connection between Doyle’s term and the concurrent Republican administration that screwed up everything they touched, including the economy?

  7. wisconsin conservative digest says:

    Nothing here worth answering. The people on this site have opinions but no answers that is why Milwaukee is disaster.

  8. Gene Haas says:

    Tax the funerals….in other words…”Get ’em even after they’re deceased. That’s better than them leavin’ it to the kids.”

  9. Vincent Hanna says:

    “we need to put together a plan to keep and grow our businesses in Wisconsin. We must keep our Seniors here they are profitable.”

    WCD, these are not answers. These are statements. They are opinions. They do not offer any explanation as to how to do what you say needs to be done. There are no policy ideas. I’m not sure if you even realize you did this, but you basically told people not to take you seriously as people with opinions and no answers are not worth paying attention to. That describes yourself. Is that lost on you?

  10. Joanne Brown says:

    I notice that one group they don’t plan to get mad is the Tavern League. How about increasing the tax on alcohol? The last time the beer tax was increased was 1969.

  11. Larry Sellers says:

    If you think that the CPAs in the Legislature are going to subject accounting services to the sales tax then I have a bridge to sell you on the cheap!

  12. Mike Bark says:

    So in other words the “CPA” caucus wants to make the sales tax law even more convoluted.

    The basic precept of our sales tax is that sales of tangible personal property is taxable and that services are exempt from taxation. Now they propose to tax some services while continuing to exempt certain services. For example, let’s tax the funeral (the service), but not the property (the casket and vault).

    I know us CPAs out there actually being CPAs will be thrilled about this.

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