Get rid of tax credits for dairy farmers? No tax breaks for meat or food processing plants? Get rid of credits for ethanol? Cut beginning farmer credits?
You’ve got to give Representative Dale Kooyenga credit. The Brookfield Republican isn’t afraid to take on the dairy state’s sacred cows.
Just as the state’s budget writing committee is wrapping up their work and Legislative leaders are about to broker a deal on public education and health, Rep. Kooyenga announces a proposal to rewrite the income tax code.
He seems to start with agriculture in mind. I bet there aren’t many cows in Brookfield.
Last summer, Representative Kooyenga and I served on a committee studying changes to the state’s income tax code. So it didn’t surprise me to see he was working on income tax reform.
But his timing in unveiling the proposal and what seem to be big changes for farmers and ag-related businesses almost ensure its demise.
That’s too bad because Wisconsin’s complex tax system needs reform.
The complexity is the product of tax loopholes, not tax rates. The State Legislature rarely meets a tax credit it doesn’t like. The result is a cumbersome tax code that hasn’t been seriously evaluated since 1999 and then the Legislature ended work without repealing a single tax credit.
There are 73 possible state adjustments after you file your federal taxes and there are dozens of credits to modify those adjustments. In the 2013 Department of Revenue report, I counted 37 credits that totaled $1.5 billion in lost revenue. My friends at the Revenue Department will remind me that the credits interact with each other and can’t always be added together: more complexity.
Messing around with state income tax is frightening for anyone who runs an operation dependent on the state. That’s because so much of what the state buys is paid for by income taxes. State income tax makes up over half of the general fund – the source of state money for health, education, local government, corrections and universities. Wisconsin is more dependent on income taxes than all but 11 other states.
While I commend the Brookfield Republican for getting this conversation started, I don’t agree with details of his proposal. For example, the proposed lowering of tax rates for high income earners - over $300,000. I don’t support his plan to allow millionaires to offset high off-farm earnings with (part-time?) farm losses. Currently no farm loss is allowed if it exceeds $600,000.
The plan favors the wealthy and doesn’t include serious reform of property tax – the part of our tax system most out of line with the national average. Start-up companies are most burdened by property tax which impacts job creation.
In the interest of advancing reform, I’d offer to be a bipartisan partner in the discussion.