Editorial: Regressive tax not answer
The proposed state budget has a disturbing sales tax increase that will not only have a negative effect on Wisconsin people, but also most businesses.
The issue of raising and expanding sales taxes in Wisconsin has been whispered about since the governor's "budget fix" speech in mid-February.
Currently, the state sales tax is five percent. Most counties (61 of 72), including Pierce County, also have a .5 percent sales tax. That brings the tax total to 5.5 percent in most counties.
Some state lawmakers are toying with raising this regressive tax another percentage point, or 6.5 percent locally. A regressive tax is one that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly, meaning that it hits lower-income individuals harder. Not only that, but the state is also considering expanding the tax to many goods and services not now affected.
The list adds burden to virtually everyone in Wisconsin. On top of the list is a sales tax on utility services such as natural gas and electricity. There are several other impacts:
--personal service (beauty, barber, nail and other personal care; veterinary services for pets; health clubs; admissions to educational events and places; dues to business groups and fraternal organizations; auto club fees; funeral services and caskets and burial vaults);
--newspapers, periodicals and shopper's guides;
--services for property (janitorial, pest extermination, certain physical plant services);
--business services (computer services, management consulting, employment services and public relations);
--professional services (legal, architectural, engineering, accounting, tax preparation);
--motor vehicle fuels (for businesses, particularly transportation and shipping);
--and fuel and electricity used in manufacturing.
On the surface, 6.5 percent might not look so bad because Minnesota is already there. The big difference is that Minnesota already exempts many more items than Wisconsin, including tax on clothing.
By expanding the tax in Wisconsin, it would place Wisconsin at an even larger disadvantage and would especially impact those of us on the border.
In the fore mentioned list, "advertising sales" was mentioned--that, of course, impacts the Herald and all other print, broadcast, billboard, internet and direct-mail media. Such a tax has been tried in only one state--Florida, where it was deemed a failure.
Of course, many people don't have much sympathy for the media or other businesses, but expanding sales taxes to businesses always has a negative impact on what people pay at the cash register. If a newspaper charges a sales tax, that cost is passed on to the businesses that buy the advertising. They eventually must raise the price of goods and services to cover the increase. Complicating matters more are companies doing advertising business in multiple states.
Wisconsin Newspaper Association President Peter Fox said: "As legislatures dominated by either party have done so many times over the years, we do expect a 'fast track' effort to push sales-tax expansion through the legislature. This would mean the bill would suddenly appear with little public notice or opportunity for comment, and be rushed into enactment."
There are several groups and organizations in the state that always seek increased government spending. These same groups are big supporters of increasing, and expanding, the scope of sales tax revenues.
There comes a time, however, when squeezing more regressive tax dollars is not the answer. This is that time, while we are in the midst of our worst economic downturn since the Great Depression.