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April 30, 2008

Wednesday Update April 30, 2008

Wisconsin Club for Growth  April 23, 2008 Volume 2, Number 18 The Wednesday Update  In This Issue 1. Combined Reporting 2. Hitting the Jackpot 3. Jonah Goldberg Make a Donation today!   Keeping Free Marketers Current on the Issues   Thanks for your support of Wisconsin Club for Growth! We hope you enjoy the newsletter. Our goal is to be brief, informative and bit provocative. We welcome your feedback. Please feel free to contact us anytime by emailing staff@wicfg.com , or come visit us on the worldwide web. Wisconsin Club for Growth Website  Back to top Combined Reporting   As the Wisconsin Legislature works to resolve a $525 million deficit, Senate Democrats have a poisonous tax increase in their back pocket to use as a bargaining chip.  This massive tax increase on businesses, known as "combined reporting," is expected to raise taxes by $130.5 million on state employers, further sapping investment and job creation from the Wisconsin economy. The tax increase, which was part of the Senate Democrats' budget repair plan, has received little scrutiny.  Here’s how it works: Normally businesses pay taxes on the products they sell in Wisconsin.  Combined corporate reporting forces companies in Wisconsin who also do business in other states, to report income to the State of Wisconsin for products they sell worldwide, thus increasing the amount of income considered taxable by the state.  That means companies could be paying Wisconsin taxes on products sold in Peru, if they fit the complicated requirements of the bill.   For more information about the Senate’s latest tax scheme, see page 26 of the Legislative Fiscal Bureau memo regarding budget adjustment proposals. Harley-Davidson, for example, would be required to report all income from all of its related entities throughout the world.  There is then a process to calculate "Wisconsin income" and many of the current tax deductions for services would no longer be allowed.  The Department of Revenue would have the opportunity to challenge, through audits, additional transactions it believes were "a sham" to avoid Wisconsin taxes.  Most seriously affected would be companies with a large presence in Wisconsin, but an even larger presence elsewhere (like Kimberly Clark, or Exxon). Proponents of the tax believe businesses are "cheating" the state out of its fair share of taxes.  Wisconsin already has the eighth highest taxes in the nation.  At a time when we face a budget deficit due to a slumping economy, Senate Democrats seem intent on further weakening Wisconsin’s business climate.  Let’s hope Assembly Republicans stand united against this $130.5 million tax.        Back to top Hitting the Jackpot on the Pubic Dime Looking for a position that pays in the high five to six figure range with paid sick leave, two weeks paid vacation, comprehensive health care coverage and a generous pension benefit? You should consider a career in state or local government. Last week, the Milwaukee Journal Sentinel reported that 119 state employees made more than the Governor's $136,000 per year salary.  In fact, the head of the state investment board makes $397,000, almost triple Doyle’s salary.  Correctional Nurse Clinician Elaine Taylor made $225,000, including more than $103,000 in overtime. Some employees justified their exorbitant salaries. "I think the Governor is underpaid," said Milwaukee comptroller W. Martin "Wally" Morics, a certified public accountant who was paid $141,814 last year. A partial database for state employee salaries can be found here.  The sheer number of individual employees earning more than twice the average Wisconsin family is breathtaking, especially considering how poorly government is performing its basic duties.  The state of Wisconsin has thrown away hundreds of millions of dollars in botched computer programs and other so called efficiency efforts. Today the Appleton Post Crescent reported that the Doyle Administration is quietly killing its infamous ACE initiative which promised to save taxpayers over $200 million dollars. The plan was to outsource computer and purchasing services to highly paid consultants, and to sell state property to private companies.  During the 2006 election, critics of the program said the acronym ACE (which stands for Accountability, Consolidation and Efficiency) actually stood for Acquiring Contributions for the Election. Doyle's campaign received tens of thousands of dollars from out-of-state executives who won lucrative state contracts through the initiative. In a related development, the Milwaukee Public School Board met in private to authorize a $170,000 salary, a $500 monthly car allowance, and thousands of dollars in pension benefits for Milwaukee Public School Superintendent, William Andrekopolous. Only government would think to reward a school system administrator for achieving the lowest math and reading scores in city history. According to the Wisconsin Taxpayers Alliance, public employee benefits are 50% higher than benefits in the private sector.  This is 15% higher than the nationwide average and substantially higher than all of Wisconsin’s neighboring states.  So while government advocates push for higher taxes for "better roads," "better healthcare" and “better education," what they're really after is better pension benefits for themselves. Back to top   Jonah Goldberg   This week, Congressman Jim Sensenbrenner warned Wisconsinites about the dangers of global warming legislation now being considered by Congress.  The Lieberman/Warner bill, which implements a "cap and trade" system for greenhouse gas emissions, will be devastating to Wisconsin because our utilities;largely produce power from coal. Sensenbrenner cites a study by the National Association of Manufacturers which says Wisconsin’s electricity rates could go up by as much as 163% in 2030 and natural gas prices could also increase as much as 176%. National Review Editor and author Jonah Goldberg recently pointed out that such legislation designed to affect climate change will only have the effect of transferring American wealth to China.  In his column "Global Cooling Costs Too Much," Goldberg says: "The costs are just too high for too little payoff. Even if the Kyoto Protocol were put into effect tomorrow - a total impossibility - we'd barely affect global warming. Jerry Mahlman of the National Center for Atmospheric Research speculated in Science magazine that "it might take another 30 Kyotos over the next century" to beat back global warming. Thirty Kyotos! That’s going to be tough considering that China alone plans on building an additional 2,200 coal plants by 2030. Oh, but because China (like India) is exempt from Kyoto as a developing country, the West will just have to reduce its own emissions even more."   Goldberg will be the featured speaker at a Club for Growth Wisconsin event on Wednesday, May 29th.  Click here to order your tickets and for more information.   Back to top