WISTAX on Corporate Taxes: Serving the Conservative Agenda

With the robust representation corporations have enjoyed on the Wisconsin Taxpayers Alliances board of directors over the decades, it is little surprise WISTAX message consistently leads one to the conclusion that corporate taxes should be done away with altogether.

WISTAX has advocated getting rid of the corporate income tax, because of all reasons, corporations use a now-closed loophole that allowed them to avoid taxes on Wisconsin profits by setting up a phony post office box “address” in a state without corporate income taxes. WISTAX regularly reports the corporate income tax collections as unpredictable, despite other taxes having less predictability year to year.

The naked advocacy for less corporate taxes was never more apparent in the wake of the national economic collapse due to the failed pro-corporate, pro-tax cuts for the wealthy sale of the federal treasury by the Bush administration. After years spent insisting the long-term budget deficit in Wisconsin was an impending disaster, WISTAX repeatedly said the state budget deficit, which ended up topping $6.6 billion, would be as low as $650 million. Why? Because among the top items on the table for closing budget holes was ending the corporate “Las Vegas” loophole referenced earlier.

WISTAX Tactics: Studies that Reinforce Conservative Agenda

Manipulate data, release studies using cherry-picked statistics

Click the thumbnail to see the original WISTAX report with a fact-check by WISTAX Watch

WISTAX SAYS: “...the main story of the corporate income tax is its lack of predictability.”

The corporate income tax is not the only unpredictable tax. However, attacking the use of the tax helps WISTAX fight for decreased corporate taxes. (Wisconsin Total Taxes 2007, Nov. 2007, Vol. 75, No. 11, Pg. 4)

The supposed volatility and unpredictability of corporate tax collections is a regular item in WISTAX reports [2005 example; 2006 example; 2007 example]. Per usual, WISTAX cherry-picks certain data to make its arguments against fair corporate taxation appear stronger. Case and point: WISTAX points to the overall amount of corporate tax collected and the change year to year as the main evidence of the unpredictable nature of the corporate tax. However, since the amount of overall tax collected per year fluctuates due to several factors (state of the economy and changes in tax laws), a more accurate measure of volatility is the percentage of overall tax collections that is made up from the corporate tax. By that measure, the corporate tax is actually considerably more predictable than the individual income tax.

WISTAX SAYS:“[The non-taxable customer charge] raised $57.7 million in 2006, an average of $10.28 per person.”

WISTAX doesn’t mention this charge is not only paid for by homeowners, but also by businesses, who tend to have much larger utility bills. Adding in the fees businesses pay to your calculation drives up the average paid. (Wisconsin Taxpayer. Forgotten Taxes. Feb 07, Vol. 75, No. 2, Pg. 3)

WISTAX SAYS: “Death Taxes”

WISTAX regularly uses the phrase “death taxes” to describe inheritance taxes. (See here and here) The use of “death tax” is literally out of the Republicans’ talking points playbook to redefine a tax only paid by a handful of the nation’s absolute wealthiest fortunes. Corporate titans want an end to the inheritance taxes to keep their wealth and their companies in full and repeated generational control by their heirs. The inheritance tax is only applicable to family fortunes greater than $3.5 million. The inheritance tax is among the most progressive – if someone is simply handed multi-million-dollar fortunes, this is income earned and should be taxed. (Wisconsin Taxpayer; January 1996, Vol. 64, No. 1, Pg. 7; July 2001, Vol. 69, No. 7, Pg. 12; Nov. 2002, Vol. 70, No. 11, Pg.9)

FORGOTTEN FACTORS

Prior to Todd Berry taking over as Executive Director in 1994, WISTAX reports often cited statistics that have since disappeared from its increasingly conservative, pro-corporate WISTAX publications. For example, take a look at some of the stats in this pre-Todd Berry WISTAX report:

• “Of the 76,000 corporate tax returns filed in 1988-89…68% reported no tax liability” (Pg 7)
• “the 833 corporations reporting net incomes of $1 million or more made up only 1% of the corporate filers, but paid 74% of the total tax liability...Many of them are headquartered out of state.” (Pg 7-8)
• “of the $11.7 billion in state and local taxes collected in Wisconsin in 1991…corporate income tax [made up] 4%.” (Pg 1)

(Wisconsin’s Tax Base, July 1992, Vol. 60, No. 7)

For more information about the connections between WISTAX and corporate interests, check out the WISTAX Watch report "WISTAX and Wisconsin Manufacturers and Commerce."

Check out WISTAX Watch's 'Critical Reader's Checklist' for tips and methods for examining WISTAX reports for conservative bias.

WISTAX Attacks on Corporate Taxes in the Media

Create anti-corporate tax education environment, provide cover for conservative politicians

"To end the practice of shifting assets to avoid taxes, [WISTAX Staffer Dale] Knapp said, "the Wisconsin Taxpayers Alliance has supported eliminating state income taxes and moving to a federal system.
-- Capital Times, 2/18/2004

State seeks banks taxes from firms using loophole
Capital Times, February 18, 2004

The question is whether banks doing business in Wisconsin tried to deliberately avoid paying corporate taxes here by setting up subsidiaries in Nevada, a state that doesn’t collect a corporate income tax… To end the practice of shifting assets to avoid taxes, Knapp said, the Wisconsin Taxpayers Alliance has supported eliminating state corporate income taxes.

Companies Attack Business Regulations
Associated Press, November 30, 2000

Wisconsin must relax its business regulations and cut taxes or risk being left behind in the new economy, business leaders and taxpayer advocates said at a summit Thursday to examine why the state lags behind in high-tech industries. Todd Berry, president of the Wisconsin Taxpayers Alliance, estimated the business costs of complying with regulations is about $2 billion a year. Jim Haney, president of Wisconsin Manufacturers and Commerce, which represents 4,600 companies in the state, presented a paper to the summit detailing more than 30 regulatory and tax reforms.

'Nonpartisan' Taxpayers Alliance highly partisan
Capital Times, September 2, 2003

If there is a question about tax proposals, the alliance is called upon to "explain" it to the unwashed. The Wisconsin Taxpayers Alliance is, in reality, a Republican (read: big business) front organization, with a board made up of some of Wisconsin's biggest Republican donors and a strategy that might have been written by Charles Sykes and the Bradley Foundation in the boardrooms of the corporations that fare so well under Wisconsin's unfair taxation system.

WISTAX Role for Right Wing Wisconsin

Provide research to fuel conservative opposition to corporate taxes

Right wing groups and conservative politicians are quick to point to the “independent” Wisconsin Taxpayers Alliance as a source when advocating for less corporate taxes.

When it comes to corporate taxes, no organization in Wisconsin is more active in working to oppose corporations paying their fair share than Wisconsin Manufacturers and Commerce, Wisconsin's largest and most powerful pro-corporate lobby organization. And when WMC needs some statistics to prop up its arguments that corporations somehow need more tax loopholes, time and again it references studies done by the corporate-friendly Wisconsin Taxpayers Alliance.

“According to the most recent data published by the Wisconsin Taxpayers Alliance,” cites one WMC memo to legislators from March 2003 in favor of the so-called TABOR amendment. “Wisconsin's state-local tax burden was 4th highest at 12.94% of personal income; and personal income taxes ranked 5th highest.” A column written by WMC President James Haney in 2004 in support of yet another TABOR-like amendment again cites WISTAX, “Todd Berry, of the Wisconsin Taxpayers Alliance, wrote recently that the bottom line on our high tax burden is Wisconsin spends more than other states.” If TABOR passed, huge corporations stood to reap the most benefit as the total tax collected on corporations would plummet. It is not a coincidence that many of the state’s most powerful corporate CEOs and presidents served on the boards of WISTAX, WMC or both. WMC aggressively supported TABOR and TABOR-like legislation.

Wisconsin Manufacturers and Commerce finds WISTAX information useful in fighting other corporate taxes, like combined reporting, which prevented multi-state corporation from avoiding Wisconsin state taxes by sheltering profits in out-of-state entities. “Multi-state corporations already pay their fair share of taxes in Wisconsin,” states a WMC position paper opposing combined reporting. “According to the Wisconsin Taxpayers Alliance, multi-state corporations account for only 22 percent of the filing corporations, yet paid 55 percent of the total tax liability.” Of course what the WISTAX report doesn’t mention is that corporations pay the higher percent of the tax liabilities because they make the majority of the money. Also, according to the Institute for Wisconsin’s Future, fully two-thirds of the 50,000 corporations in Wisconsin reported zero income tax paid to the state in 2005. "For example, Microsoft, Merck and Sears earned a combined $18 billion in profits — surely some of which came from Wisconsin consumers — but paid a combined zero in Wisconsin corporate income tax.”