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Sunday, June 07, 2009

Business Will Challenge Tax That Can't Be passed Down?

Saturday's Janesville Gazette contained the newspaper's expected WMC and WEDA collaborated editorial rant supporting the misguided "anti-business" publicity campaign against the state of Wisconsin. This partisan driven editorial was apparently also the paper's attempt to muster public support in favor of government sponsored capital hand-outs and bidding procedures to 'woo' business development.
JG Editorial Excerpt:
Two local Democrats, Sen. Judy Robson of Beloit and Rep. Mike Sheridan of Janesville, earn credit for the DOZ proposal. But they are part of the Democratic majority in Madison that is backing billions in new taxes. Many of these target businesses and won't help Wisconsin's economy thrive.
A tax targeting business? That's constitutionally impossible according to Stan Milam's column on the very same page titled "Will Democrats take stand against oil company tax?" In it, Milam repeatedly parrots the notion that a provision in Wisconsin's oil tax proposal prohibiting companies from passing along the cost (of the tax) onto the consumer is unconstitutional.
JG Excerpt: (Milam)
Rep. Mark Pocan, D-Madison, says he's not sure the tax and the prohibition on passing along the costs is constitutional. Mind you, this is after Pocan's committee approved the provision.
Milam's column creates a revolving contradiction with the editorial perception that businesses pay taxes and are now targeted to pay more. But he does re-enforce the notion that most taxes meant for business are rarely challenged by business in the courts because companies are free (constitutional?) to bury the cost burden in punitive price hikes on consumers or wage and benefit cuts on workers. So, are businesses truly taxed if they pass the cost down to the next in line?

So the argument that businesses are targeted or pay too much state tax doesn't hold water. But Doyle and the Democrats may have actually stumbled upon some tax language that may work as it is intended. Otherwise, why bother to challenge it?

I'm not trying to pretend I know the legal structure on which the proposed oil tax is founded. But judging from Milam's subjective reactions to it, it appears the oil tax - unlike all other taxes - will work as intended. If not, let the courts decide. It's definitely worth the effort and a challenge may open up the right doors to make it work. How will we know if we don't try.

Republicans and their supporters can't have it both ways. They can't say Wisconsin businesses are overburdened with taxes, yet are willing to go to court the moment it occurs they are expected to actually pay one of them.

NOTE: Milam's column is not available on the open Web.

It is my belief that the federal government, acting as the premier equalizer, should prohibit states, counties and local jurisdictions from using cash, legislated tax credits, rebates or any other creatively inspired capital derivative as a bargaining weapon against each other in the quest for private venture economic development. We should stand together as a united country with each state and region participating in a cooperative economic meritocracy based on the people's ability to improvise and innovate, available resources along with transportation, housing and education, to land private business start-ups and expansions - not to be decided by the wealth of participants in a capital-based bidding process.

Of course, the current practice involving capital bartering for economic development under governmental ordinance and oversight is nothing new. It has been going on for decades. It is the status quo. And those encouraging and advocating for these short-term solutions to our deep and long-term problems are only fueling the status quo continuum. Once it takes root it is like a train rolling downhill with no brakes. Those jumping onboard are not slowing it, their weight is only increasing the power of the virtual impact that awaits. It is a defacto morality that works in tandem with campaign finances, government corruption and corporate cronyism.

We must not allow cities or regions, big or small, to suffer economically merely because they were unable to muster a capital hand-out to the wealthiest entities among us. It should be a crime. The cash hand-outs and tax credit derivatives legalized in our state houses under the guise of an economic incentive package should anger each and every one of us.

I realize many will think these statements are from an impossibly hopeless idealist, but I call it the only way forward to a sustainable and prosperous future. Nothing is impossible.

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