John Neher

Wisconsin’s Democratic Governor Proposes $1 Billion in State Tax Hikes

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Posted by John Neher on Monday, February 22nd, 2021, 10:38 AM PERMALINK

Wisconsin Gov. Tony Evers (D) introduced his $91 billion state budget this week, a largely political document that would increase state spending by more than 9% this year, and impose about $1 billion in numerous tax increases. Right before Evers was elected in 2018, he claimed he would raise no taxes. 

Evers’ budget proposal raises taxes in the following ways: 

— Limits the amount that manufacturers can claim for an existing tax credit to $300,000 a year. That will raise taxes by about $485 million over the next two years. 

— Eliminates the 30% percent long-term capital gains exclusion for single filers earning more than $400,000 and joint filers earning more than $533,000. This move will increase taxes by about $350 million.

Raises taxes roughly $540 million by conforming to the base broadening and revenue-generating provisions of the 2017 Tax Cuts & Jobs Act (TCJA). Such conformity with the TCJA would raise state taxes by $548 million dollars over the next two years. 

Gov. Evers is also proposing a half-cent local sales increase that, along with the other tax hikes included in his budget, has been met with strong opposition from the Badger State’s business community. 

“Hard-working Wisconsin families and small businesses have had to make tough decisions about their own budgets this past year,” Scott Manley, executive vice president for Wisconsin Manufacturers & Commerce, said of Gov. Evers’ budget proposal. “Instead of having similar discussions about how to make government more efficient, this plan just takes more money from taxpayers at a time when they can least afford it.” 

A Wisconsin Policy Forum report forecasted in December that the state could possibly be facing the largest budget shortfall since 2011. Governor Scott Walker and Wisconsin legislators closed that 2011 shortfall with no tax hikes thanks to the help of Act 10, the landmark entitlement reform, key parts of which Governor Evers is proposing to repeal as part of his new budget that will serve as a door stopper for Republican legislators. The state will have roughly $2 billion in reserves by June 30th, and that is before the billions of additional federal cash that the new Democratic-run Congress is getting ready to send to Madison. Aside from the harm Governor Evers’ proposed tax hikes would do to individuals, families, and employers across Wisconsin, the fact is that they’re simply not needed.

Photo Credit: Phil Roeder

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MN Gov. Tim Walz Proposes Slate of Tax & Fee Hikes

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Posted by John Neher on Tuesday, February 2nd, 2021, 3:37 PM PERMALINK

Minnesota Governor Tim Walz introduced his budget proposal last week, a plan that is dominated by big tax hikes. 

Walz leads his tax grab with a so-called millionaire’s tax that will in fact hit people making far less than $1 million annually. Walz seems to think the government gave successful people their earnings, saying, "This is about a progressive taxation system that says, much is required of much given to some folks."

Walz wants higher taxes for many reasons, including giving teachers’ unions more money. Also standing out amongst a mess of bad tax policy is a tax hike on life-saving e-cigarettes.

 

The proposed tax increases for Minnesota include:

-An increased income tax rate for household incomes above $1 million

-An increase in the corporate tax rate for large companies, specifically companies who recorded a profit during the pandemic

-Imposing an additional capital gains tax that includes a 4% tax on gains over $1 million for individuals, trusts, and estates

-Taxing foreign income that returns to the U.S. 

-Revising the estate tax for individuals, not for small businesses or farms

-$139 million increase in tobacco taxes on both vaping and cigarettes

 

Fee increases include:

-Increased fees on new car license plates

-Higher state park fees, specifically state park passes

-Higher boat registration fees 

-Increased licensing fees for industries such as insurance, pesticide fees, and newborn  screening fees

 

Republican lawmakers and Minnesota businesses voiced opposition while Democrats, teachers, and labor unions praised the budget's proposed provisions. Minnesota Chamber of Commerce President Doug Loon said of the budget proposal, "While some of the governor's recommended investments have merit, the tax increases required to support this degree of ongoing spending will knock Minnesota out of competitive rankings and threaten our economic recovery."

GOP leaders stated that they would not approve a plan that included tax increases and that the state should cut state various agency budgets and dip into budget reserves instead of raising taxes.

"Proposing tax hikes is shockingly tone-deaf after Minnesota families and businesses have endured nearly a year of the governor's shutdowns and constantly-changing executive orders," House Minority Leader Kurt Daudt, R-Zimmerman, said in a news release. "The governor knows they have no chance of becoming law. We are ready to roll up our sleeves to pass a bipartisan budget that funds our priorities while asking the government to tighten its belt to close the budget deficit without tax increases."

Although the COVID-19 pandemic has posed significant challenges for state governments. It is not in the interest of anyone to impose new taxes and fees. States will prolong their economic recovery if their only course of action is to raise taxes despite the unsteady financial health of their small businesses, families, and students. 

Photo Credit: Joe Lencioni

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