A higher circle of tax hell

The Milwaukee Journal Sentinel claims this news should make us feel better:

Wisconsin’s status as a tax hell may have hit a permanent downgrade to a heck following the discovery of a long-undetected error by the U.S. Census Bureau and its annual tax rankings.

For six years and possibly longer, the federal agency has been incorrectly double-counting some Wisconsin taxes to the tune of $215 per person in the state, artificially inflating where the state fell compared to its peers in 50 state rankings, a report by the Wisconsin Taxpayer Alliance has found. The group and state officials recently discovered the error independently and say it accentuates the state’s steady improvement from a top three tax state two decades ago to somewhat more than average today.

In 2013, the most recent year available, Wisconsin taxes should rank 15th in the nation as a share of citizens’ income, compared to the rank of 11th under incorrect data recently released by the U.S. Census Bureau, said Dale Knapp, research director for the Taxpayers Alliance.

Wisconsin ranks lower still when graded by taxes per person and by total government spending here, which now ranks 24th in the country.

Plus, these latest rankings don’t reflect the $541 million in tax cuts made in the spring of 2014 by Gov. Scott Walker and Republican lawmakers, giving the state’s rankings the potential to fall even lower once these data are released with their usual two-year lag. Other tax cuts from 2011 are also still being phased in.

“The big tax cuts that we saw aren’t even being accounted for yet,” Knapp said. …

What the Taxpayers Alliance found was that the Census Bureau hadn’t subtracted the tax credit money paid by the state government to local governments in Wisconsin to lower their net property tax levies for home and business owners from the gross amounts set by local officials. The state gets that tax credit money from state sources such as income and sales taxes, so the mistake amounted to double-counting the same big chunk of tax money.

Working on their own, state tax officials had come to a similar conclusion and have contacted the Census Bureau, which will be correcting this year’s numbers and those going forward in the next report, Knapp said.

The mistakes appear to go back to 2009 but it’s not yet clear that the Census Bureau will correct data from previous years, Knapp said.

One thing the correction doesn’t change is how much taxes Wisconsin residents actually paid in 2013 and other years. The corrected figures show that residents in the state paid about 10.9% of their total income in state and local taxes in 2013, or about $4,618 per person, less than the 11.3% of income and $4,833 per person that the Census Bureau data would have suggested.

That means that instead of being 15th in the nation for taxes per capita, Wisconsin actually came in 19th. …

Jon Peacock, research director at the Wisconsin Council on Children and Families … said the errors helped explain some of the disconnect between Wisconsin taxes, which are traditionally higher than the national average, and the state’s spending ranking, which has usually been lower.

“However, there are also a couple other significant factors. Wisconsin relies less on fees than most other states and historically has ranked low in federal (government) revenue,” Peacock said.

When it comes to spending, he said, Wisconsin is now in the middle of the pack among states.

The Census Bureau error provides a golden opportunity for a comment about the incompetence of government. I’m going to pass that up, though, and explain why this really isn’t good news.

That is because in a state that has a statutory requirement for a balanced budget (on a cash basis, not the correct basis of Generally Accepted Accounting Principles), this state has minimal statutory controls on government spending (and none at the state level), and no constitutional controls on government spending at any level.

The Legislature’s lack ofr political will to institute a Taxpayer Bill of Rights-like addition to the state Constitution makes us overtaxed. Had constitutional controls limiting government spending growth to the rate of inflation plus population growth been in place since the late 1970s, state and local government would spend half what it spends now. That means our taxes would be toward the bottom of the U.S. instead of near the top. At some point Democrats will be back in charge in Madison, free to spend and waste every single cent Wisconsinites have.

There is no difference worth measuring, except for politicians, between having the 11th highest state and local taxes in the U.S. and the 15th highest state and local taxes in the U.S. That’s like moving up one of Dante’s circles of Hell. And all the abuses of state and local government — too many (as in 3,120) units of government, a state budget that is still not balanced by the correct measure (the same measure by which the state requires every other unit of government to balance their budgets), taxpayer-paid employees (of which there are too many) who cannot be fired for incompetence, legislators who get paid as much by themselves as the average Wisconsin family makes in a year, and everyone with a “D–Milwaukee” or “D–Madison” after their names — continue unabated.

 

Leave a comment