Struggling For Tax Fairness

People like to grumble about taxes but let’s face it: Taxes are necessary for a safe, well-educated, prosperous society. Taxes pay for the education of our children, police and fire protection, safe roads, natural resources conservation, economic development, and many, many other things.

Some people take a dim view of taxes, such as New York real estate mogul and convicted tax evader Leona Helmsley who said: “We don’t pay taxes. Only the little people pay taxes.”

Most of us “little people” pay taxes as our obligation to the common good.

Since the founding of our nation, elected officials have struggled with how to fairly assess taxes in a way that encourages hard work and economic success, but does not burden those who can no longer earn an income.

During my freshman year in the Legislature, I drafted Assembly Bill 892 to help people who are no longer working but still have to pay residential property taxes. Retired people want to stay in their homes, but may be forced out by high property taxes. My bill would have assisted homeowners age 70½ and older whose income falls below a certain level. The bill did not pass, but I and other legislators continue to work on tax relief to help our grandparents and great-grandparents stay in their homes.

Another tax the Legislature has taken up is the “personal property tax,” which is a business tax. Over the years, the Legislature has carved out numerous exemptions to this tax. What remains taxable are items such as equipment, furniture, fixtures, watercraft, and other items that are exclusively paid by small Main Street businesses, not large corporations. As economist Martin A. Sullivan said: “There may be liberty and justice for all, but there are tax breaks only for some.”

Not only is this unfair, but the complexity of the tax law creates burdensome paperwork for the Mom-and-Pop shops. I’ve also heard from municipal officials concerned about the loss of revenue if the tax were eliminated.

The Legislature recently passed a bill to completely eliminate the personal property tax, but Gov. Tony Evers vetoed it. The Governor wants the Legislature to pass a better version of the bill, one that protects Wisconsin municipalities from a loss of tax revenue and prevents unintended tax loopholes for out-of-state corporations. While I voted in favor of repealing the personal property tax, I support all efforts to pass a better bill.

Now turning to taxes that affect everyone: The income tax. When Gov. Tony Evers ran for his first term, he promised to cut taxes for middle class families by 10 percent. In his first two years in office, the Governor provided $577 million in individual income tax relief for lower- and middle-income earners. And then in the midst of the pandemic, Gov. Evers signed a bill that provided $480 million in tax relief for Wisconsin businesses and families affected by the pandemic. Most recently, the Governor signed the 2021-23 budget, which provides a 15 percent reduction in individual income taxes compared to the rates in place before he took office.

As for real estate taxes, anyone who receives a property tax bill knows that the bulk goes for their community’s K-12 education. The budget that the Governor signed – and which I voted in favor of – guarantees that Wisconsin will receive an extra $2.3 billion in federal funding for schools through the American Rescue Plan. This is a way to keep property taxes down.

It is unfortunate that some wealthy Americans believe “Only little people pay taxes.” I believe it is our responsibility as members of a civil society to pay our fair share. What constitutes “fair” is a perennial question. One person’s fair is another person’s unfair.

But I will always agree with former U.S. Senator Bob Dole (R-Kansas) who said: “The purpose of a tax cut is to leave more money where it belongs: In the hands of the working men and working women who earned it in the first place.”

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