Rep. John Macco, chairman of the Assembly Ways and Means Committee, suggests a comprehensive tax overhaul could include cutting $2.5 billion worth of state exemptions.
“I think there’s several anomalies,” he said at panel discussion yesterday at the Metropolitan Milwaukee Association of Commerce. “So if you take a look at sales tax, we collect $5 million worth of sales tax, but we have $6 million worth of sales tax exemptions.”
The Ledgeview Republican, leading the effort for Assembly Republicans, pointed to several quirks in the current system: yogurt and raisins as individual products are tax exempt, but yogurt-covered raisins are taxable. And while honey and roasted nuts are individually tax exempt, honey-roasted nuts are taxable.
“We can’t agree on what candy is, because a Twix candy bar is tax exempt, and M&Ms are taxable, so it’s really quite funny,” he said, adding that clay pigeons — used for sport shooting — are tax exempt as well.
“There might be a real good reason for why that is, but I think we’ve got to take a look at it,” he said, noting the effort likely will impact the next budget. “I think the model that we look at is, you take out some of those exemptions and those anomalies. And if you do that, in my estimation …I think there’s about $2.5 billion worth of exemptions that you eliminate, and then you use that to offset some of those other things.” (referring to local government funding)
This abundance of exemptions ties into why Wisconsin hasn’t recently undergone a tax overhaul, according to Todd Berry, president emeritus of the Wisconsin Taxpayers Alliance.
“Why don’t we get tax reform? Frankly, it’s not in the interest of people who make politics a career to do tax reform, because what they like to do is give people stuff,” Berry said. “And the way you give people stuff is you create tax exemptions or deductions or whatever that chop up the tax system and make it bad in all sorts of ways.”
See more at WisBusiness.com.