Rep. Dale Kooyenga: With Taxes Due, Tax Reform Is Overdue

From State Rep. Dale Kooyenga (R-Brookfield):

By Monday, thousands of Wisconsin residents will have filed their tax returns after wading through pages of unnecessary instructions that ultimately have little or no impact on their tax liability. As a Certified Public Accountant (CPA), I am reviewing the Wisconsin tax code and plan on introducing a tax reform package within the next month. 

Wisconsin’s tax code is horrendous. Wisconsin consistently ranks among the worst 10 states for property taxes, income taxes and overall business taxes. The low rankings are a direct result of Wisconsin’s high tax rates and overall tax code complexity.

The Wisconsin code needs to move away from the practice of picking winners and losers. Filers are often informed of the tax break in the following year which means the special tax break is not driving the intended behavior. The majority of our tax credits and deductions represent nothing more than spending through the tax code. A simpler, flatter tax is pro-growth and good for Wisconsin.

Last year, my Assembly colleague, Rep. Robin Vos, chaired a bipartisan Symposium on Income Tax Reform that determined that the state tax code is unnecessarily complex and changes to the code are necessary. 

Tax Reform Objectives and Facts:

Lower Wisconsin’s Overall Rates

 FACT:  Wisconsin’s top tax bracket is 7.75%, Illinois top bracket is 5% even after Illinois recently raised income taxes by over 50%. Wisconsin’s top bracket is still over 50% higher than Illinois’ rate. A typical middle class Wisconsin family pays more in state income taxes than an Illinois or Michigan millionaire. Michigan’s flat tax rate of 4.25% is lower than Wisconsin’s lowest tax bracket. Seven states have no income taxes. 

Simplify the Wisconsin Tax Code

FACT:  Wisconsin has over 52 credits. The majority of these credits are used by less than 1% of filers. Also, Wisconsin has taxes in addition to the baseline income tax.

Broaden the Base – Minimize the Practice of Picking Winners and Losers

FACT:  The Wisconsin tax code penalizes marriage through a variety of practices. The federal code requires the state income tax code to have certain income exclusions creating winners and losers. The Wisconsin tax code over the last decade has moved away from lowering overall rates in favor of creating narrowly crafted tax credits or tax credits subject to bureaucratic discretion. 

Rep. Kooyenga, a member of the Joint Finance Committee, will introduce a tax reform package as a motion to the 2013-2015 state budget. Rep. Kooyenga serves the 14^th Assembly District which includes Brookfield, Wauwatosa and Milwaukee.