GOP Wants to Cut Back Taxpayer Donations

It’s too easy for Capitol leaders of both parties to tweak Wisconsin’s income tax code to authorize the addition of one – c’mon, just one more — tax check-off to support popular causes.

That’s why, for the first time, there was a Special Olympics check-off option on the income tax form you filed a few weeks ago. It also explains why the American Red Cross Wisconsin Disaster Relief check-off started when taxpayers filed 2011 income taxes last year.

These followed the Military Family Relief Fund and Second Harvest check-offs, which started in 2010. And, three other check-offs – for the Fire Fighter Memorial and Prostate Cancer and Multiple Sclerosis research – got their first donations in 2007.

Department of Revenue officials say the 10 income tax check-offs raised slightly more than $1 million for their causes last year. But amounts donated varied greatly – from $284,039 for Endangered Species to $34,816 for the Fire Fighter Memorial.

The check-offs work like this: A taxpayer can designate a specific donation to any — or all — of the check-offs. The donation either reduces that taxpayer’s refund, or that amount is added to the taxes she or he owes.

A voluntary, painless way for taxpayers to support good, noble causes, right?

It’s more complicated than that. Some check-offs duplicated each other – the ones for breast and prostate cancer research, for example, which were just combined. And two different state agencies – the Military Affairs and Veterans Affairs departments — administer separate check-offs to help veterans and their families.

Check-offs are also not widely used by taxpayers, raising questions about whether administrative costs exceed the help provided. When they filed their 2011 income taxes, only 77,834 taxpayers – or 2.6% of the 2.9 million tax filers – used the check-offs.

What was the average check-off donation last year? Revenue Department figures put it at $13.20.

Also, support has fallen for nine of the 10 check-offs in recent years. In 2008, for example, the 22,791 taxpayers who used the Endangered Resources check-off donated $398,489. Last year, only 15,364 taxpayers used that check-off, and they gave $284,039 – a 28% drop over four years.

So, many Assembly Republicans – led by members of its CPA caucus (lawmakers who have day jobs as certified public accountants) – have folded reform of income tax check-offs into their package of tax-code changes, which they want added to the 2013-15 state budget that will be signed into law by July 1.

Those Republicans also want to use an additional $444 million in future tax collections, to abolish many little-used tax credits, and to create three tax brackets – instead of the current five – to double the income tax cut Republican Gov. Scott Walker recommended in February.

Under the Republicans’ plan, according to a summary from the Legislative Fiscal Bureau, no income tax check-off would reappear on tax forms the following year, unless contributions to it totaled at least $100,000 the previous year.

It would also continue the current limit of 10 check-offs per year. So, legislators could continue to merrily create new check-offs, but only the 10 that raised the most would make the tax form next year.

Five of the 10 current check-offs raised less than $100,000 last year – so they would be gone in two years, under the Republicans’ plan.

The Fiscal Bureau listed those five check-offs, and how much each raised last year, as: Veterans Trust Fund, $94,478; Multiple Sclerosis Research, $78,048; Prostate Cancer Research, $64,312; Lambeau Field, $59,717, and Fire Fighter Memorial, $34,816.

One out of every 1,000 tax filers used the check-off to support the Fire Fighter Memorial, donating an average of $8 each.

State officials say the most popular check-offs raised these amounts last year:

*$284,039 for Endangered Resources donated by about 15,300 taxpayers, who each gave an average of $18. But, in 2006, the Endangered Resources check-off raised $483,589.

*$155,426 for Breast Cancer Research from 11,022 taxpayers who each donated an average of about $14. In 2006, that check-off raised $280,275.

*$119,749 for Second Harvest Food Banks from about 8,100 taxpayers who each gave an average of about $14. That total fell from $138,786 in 2010.

*$114,059 for Military Family Relief Fund, administered by the Department of Military Affairs, from donations averaging $14.

*$101,085 for Red Cross Wisconsin Disaster Relief from donations that averaged about $14.

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. This column reflects his personal perspective. Email stevenscwalters@gmail.com