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The taxman cometh ...

... but state revenue secretary touts business tax breaks

POSTED June 19, 2012 3:09 p.m.

PLATTEVILLE — The Platteville Area Chamber of Commerce hosted another Walker administration Cabinet secretary last week.

Richard Chandler, secretary of the state Department of Revenue, spoke to the chamber one month after secretary of transportation Mark Gottlieb spoke to the chamber.

Chandler sounded less like the state’s top tax collector and more like a business promoter as he touted “the tax changes we’ve made to encourage job creation.”

One tax credit that will start taking effect in 2013 will credit income generated by manufacturing or agricultural property. The 1.875-percent credit in 2013 will grow to 7.5 percent by 2016, credited against the state’s 7.9-percent corporate income tax.

“Manufacturing and agriculture have traditionally been two main economic drivers of Wisconsin,” said Chandler. “If the manufacturing and ag sectors are doing well, we’ll do well in construction, in real estate, tourism and down the line. … There are tremendous benefits for a strong manufacturing and agriculture sector, and we want companies to realize we want these activities in Wisconsin.”

A more general tax break exempts capital gains taxes on funds invested in Wisconsin businesses for at least five years, as well as taxes on capital gains that are reinvested in Wisconsin businesses.

Chandler said the tax breaks, passed by the Legislature in 2011, “really put us in a position where we have things we can boast about in the area of business taxes” in “a very, very competitive tax climate.”

As opposed to tax cuts, tax credits are “more targeted” and “really try to highlight, make Wisconsin stand out in a positive way, that we’ve got very significant incentives,” he said. “The plus is you can use them as a marketing tool and highlight the fact that things are changing for the better.”

Chandler said the Legislature needs to reduce other taxes as well, including individual income taxes, which are “a little bit above the national average.’ He said Gov. Scott Walker wants the Legislature to pass a middle-income tax cut.

“Great strides were made in the past year and a half,” said Chandler, including a 0.4-percent decrease in property taxes on a median-value home, accomplished by “tight limits on local government spending so property taxes aren’t going up.” He noted that the elimination of the $3.6 billion projected structural deficit before the 2011–13 state budget “sets us up very well for the state’s next budget.”

Chandler admitted that the state’s budget is not balanced by the standard the state requires of units of government within the state, Generally Accepted Accounting Principles. State law requires the state budget be balanced on a cash basis.

“By that tally [GAAP] the state’s budget has not been balanced as long as anybody can remember,” he said, noting that state government began GAAP measurements since 1989. “Overall, it would be the goal of this administration to improve its position.” Eliminating the GAAP deficit, nearly $3 billion, “entirely in one year would be a monumental task.”

One way to improve the state’s GAAP position, he said, would be to improve the state’s end-of-year balance from the current 0.5 percent of spending to 3 to 5 percent.

While the state is one of 15 that had a GAAP deficit in any year in the past decade, Chandler said the state’s unfunded liabilities — mainly government employee retirement benefits — are “nearly 100 percent funded,” which is “much better than most states.”

Increasing revenues from the improving economy also means “we won’t be in crisis mode, unlike the past several budgets,” he said. “We see a lot of good signs for the state’s economy. We want to make sure we’re doing things to put Wisconsin into a position to add jobs and grow.”

State government also has a different attitude about regulation, Chandler said. “The direction from the governor’s office has been to be maybe more careful and cautious” about new regulations, and the governor’s office now reviews new regulations before they take effect.

Areas state government is focusing on include the state’s workforce. “Businesses are having trouble finding enough workers with the skills they need,” particularly in skilled trades, said Chandler. Schools and technical colleges need to let “kids know about the opportunities that are out there.”

Beyond tax law and business climate, Chandler touted initiatives to improve customer service in his department, including a Plain Language Initiative to make forms easier to understand, and promoting electronic filing of tax returns, now up to 81 percent, fifth highest among the states. The department also has assembled working groups to “do business better” and “streamline things” in audits and tax assessments.

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