Wisconsin’s tax climate for businesses continues to rank among the bottom 20 states despite several years of Republican tax cuts, according to a national think tank that advocates for lower tax rates and a more streamlined tax code.
The latest business tax climate index rating from the Washington-based Tax Foundation comes as taxes become a major focus of the race between Republican Gov. Scott Walker and his Democratic challenger, state Superintendent Tony Evers.
On Tuesday, Evers continued his call to lower taxes on working families, without saying what other taxes may go up or providing details about his plan, which is drawing ridicule from Walker.
Walker, in a new television ad, referenced a children’s show that was popular when he was in elementary school to say Evers would raise income, property and gas taxes. Evers hasn’t ruled out tax increases as he promises a more equitable tax structure that benefits the middle class.
“I want fair taxes and I believe those 860,000 families in the state of Wisconsin who are working families should get a tax cut,” Evers told reporters after a speech at the Milwaukee Rotary.
The battle over where the candidates stand on taxes has dominated the race in recent days, six weeks before the Nov. 6 election. Evers had a slight lead over Walker in last week’s Marquette Law School Poll, which came after two earlier polls had the race about even.
The poll also found 55 percent of likely voters said they prefer raising spending on schools to cutting property taxes, compared with 39 percent who preferred the opposite.
Walker, in a fundraising email sent Tuesday, told his supporters that “the polls are right” and that means they will have to work harder to win.
Walker and Republicans pounced on Evers’ willingness to raise taxes, branding him “Tony the Taxer,” a throwback to a GOP nickname for former Democratic Gov. Tony Earl when he ran for re-election in 1986. He was defeated by Republican Tommy Thompson.
The new Walker ad goes back even further, mimicking a skit from the PBS show “The Electric Company,” which ran from 1971 to 1977. The Walker ad features the silhouettes of two people sounding out the words “property,” ‘’income” and “gas” to argue they will all go up under Evers.
Evers has not unveiled tax or roads plans, but he’s said “anything is on the table.”
When pressed for specifics Tuesday, Evers said, “It’s all about priorities, it always has been. That’s the way it’s worked for Republicans and Democrats over time.”
Evers has said he’s open to raising the gas tax to help pay for road construction projects and improvements that the Democrat argues have been neglected under Walker. His proposed education department budget would increase aid to schools by 10 percent, a move Evers argues can be done without raising property taxes.
Walker reiterated Tuesday his opposition to raising gas taxes unless there is an offsetting reduction in taxes elsewhere. But Walker has refused to raise the gas tax even when he has successfully pushed tax cuts through the biennial budget.
Walker has boasted about cutting taxes by $8 billion since taking office. Last year he and the Republican-controlled Legislature eliminated a state forestry property tax, the alternative minimum tax and several provisions of the state’s personal property tax. In a previous budget they reduced the number of income tax rates from five to four.
He also passed a $100-per-child tax rebate and a one-time back-to-school sales tax holiday, though those didn’t improve the state’s ranking with the Tax Foundation, which opposes tax carve-outs that favor one group over another.
Wisconsin ranked 32nd in the organization’s annual rankings of business tax climate. That’s up from 35th last year using the group’s current methodology. Its current methodology only goes back to 2014, though prior to Walker taking office Wisconsin ranked in the bottom 10 using a different methodology. Since 2014 it has ranked between 36th two years ago to 32nd, where it was previously three years ago using the current methodology.
Though that’s only one conservative-leaning group’s measurement of the state’s tax system, the Tax Foundation’s ranking has been cited by Wisconsin Republicans for years as a sign the state’s tax code was too onerous for businesses.
Jared Walczak, senior policy analyst and lead index author, said the latest bump up in the rankings is more a reflection of other states losing ground by raising taxes or making the corporate tax code more complicated than Wisconsin taking major strides to clean up its tax code.
“It’s a mix of some modest improvements in the state, but big reform has not happened yet,” Walczak said.
Kentucky improved its ranking the most this year, moving from 39th to 23rd, after streamlining its tax code in a way that increased revenue.
State Rep. John Macco, R-Ledgeview, chairman of the Assembly Ways and Means Committee, called Wisconsin’s business climate tax ranking “progress … but we’re not anywhere near done.”
Macco is leading a review of the tax code with the goal of devising a proposal that is revenue neutral. Ideas that have been floated include a 4.5 percent flat income tax rate that eliminates a large number of exemptions and deductions, similar to what has happened at the federal level, he said. He plans to provide recommendations to simplify the code to the governor’s office in time for the next budget.
Macco said a lot of progress has been made in getting the state to a point where a major rewrite of the tax code is possible, but he’s doubtful it would happen if Evers is elected governor.
“If we were to have a change in leadership, I think we will have missed the opportunity to do it,” Macco said.
Rep. Melissa Sargent, D-Madison, a member of Macco’s committee, said she expects there would be tax law changes if Evers is elected, but the cuts would be targeted at “hard-working folks, small business owners and entrepreneurs.”
“Over the last eight years in Wisconsin, the tax reform that has been in place has benefited major corporations,” Sargent said. “Gov. Walker giving folks who have children a $100 tax credit and a sales tax holiday that saved the average family nominal amounts compared to what they’re actually spending isn’t a solution to the problems Wisconsinites are facing.”