The state anticipates a budget surplus of $385 million in June of 2019. In anticipation of that surplus, Governor Scott Walker is proposing a tax rebate, a tax credit, and a sales tax holiday. The governor is intent on returning the surplus to the tax payers…in a very roundabout way. Of course the Democrats are seeing this as a election year gimmick and considering the timing and the method of credits it certainly is.
First is a child tax credit of $100 for each child under 18 years of age. There would be $100 returned to families for each eligible child in each of the tax years in the state biennial budget period. The first $100 would be a child tax rebate before the 2018/2019 school year in the form of a check to every eligible family. Quite conveniently scheduled to precede the August primary elections. Besides the partisan scheming involved, rebates are expensive means to return money to taxpayers. That requires assembling the requisite data, creating checks, stuffing envelopes, affixing postage or indicia, and then mailing them to tax payers. I don’t know what that would cost per item but I am guessing it would run into the several millions of dollars {about 671,000 families with 1.22 million children are expected to qualify}. Not exactly the best use of tax payer money…unless you are running for re-election.
The second year (when the governor isn’t running for re-election), families would receive the money as a tax credit. If the state is really intent on returning funds this way, tax credits in both years would be the most efficient and cost effective methods.
But I still have an issue with this…I don’t have any children under 18…but I pay sales and income taxes to the state every year…where’s my cut?
The second mechanism for returning surplus tax dollars is a sales tax holiday. This is always an absurd enterprise but Governor Walker makes it even more extreme. Just look:
The deal would provide a one-time $50 million sales tax holiday for the first weekend in August that would cover all goods under $100, not just back to school purchases as Walker and some other Republicans had previously sought.
This tax holiday would also occur just before the August primary. I don’t think that’s a coincidence. But ignoring the partisan tendency here, as a former retailer, and a computer programmer that worked on a sales tax system for a national retailer back in the day, coding sales tax calculations in point of sale devices isn’t a trivial undertaking. National retailers probably all have robust systems now a days that can handle short term events like this {particularly with spending limits or item caps, etc}. But smaller retailers who rely on purchased software or other services may have to pay to load the short term changes into their systems and then pay again to revert to the current tax codes. Something that should be looked into.
And then there is the unspoken loss of revenue to the counties and stadium taxing authorities…if they state isn’t collecting taxes…they probably aren’t either. And we know that there are very few counties that have the half cent sales tax that aren’t relying on that income in their own very strapped budgets. And I doubt the state is willing to make them whole!
But what to do with the $385 million surplus…well I have four quick ideas that I hope make some sense to many of you.
First: just reduce income taxes in the 2019 – 2021 budget. Chances are most of the current tax payers would benefit.
Second: deposit the monies in a rainy day fund. It wasn’t that long ago that state had revenue shortfalls and budgets were cut or monies moved around. There’s no reason Wisconsin couldn’t have a rainy day fund for future economic downturns.
Third: the firewall between the general budget and the transportation budget has been fairly porous over the past decade…maybe some of those on hold or deferred road projects could get kicked off.
Fourth: the day Madison needs to start cutting tax credit checks to Foxconn isn’t that far down the road…maybe we should set this money aside in anticipation of that day.
What do you think?
Previous takes on sales tax holidays in Wisconsin:
Scott Walker’s hare-brained scheme
Better than reducing taxes —
Fix the roads — and I don’t mean the Foxconn Interstate
Share revenue with local governments
Return some of the hundreds of millions taken from UW System
Restore DNR scientists
Deal with CWD
Test rape kits
In other words, fulfill the responsibilities of governing that have been entirely neglected by this administration focused on giving away the store to donors.