WISTAX: Wisconsin Income Taxes are in the top 10 for Mid/High Income Filers

Via WisPolitics:

n 2003, Wisconsin state income taxes paid by filers with incomes in the $35,000-$75,000 range were higher than in many other states. For single filers with incomes in this range, Wisconsin’s income taxes were among the top 10 nationally. For married, joint filers, Wisconsin ranked from 11th to 15th, depending on income. These are several of the findings in a detailed new study of income taxes nationwide published by the Wisconsin Taxpayers Alliance (WISTAX).

More on the Tax System Mess

Carrie Johnson writes a well done article on a variety of 1990’s tax shelter schemes that reduced or eliminated capital gains taxes. The interesting thing, in all of this, is the transparency these activites give to the mess that is our tax system. Johnson takes a look at many points of view, not just the IRS’s:

Many of the KPMG partners denied they had engaged in a conspiracy to break the law, arguing instead that they had exploited long-standing loopholes in the arcane tax code. Lawyers and tax experts analyze shelters to determine whether they will pass IRS review on a “more likely than not” basis — a standard that amounts to a slightly more than 50 percent chance.
There are ongoing questions about whether the shelters themselves were lawful. A civil case filed in San Francisco by an investment firm that devised one of the structures is challenging the IRS interpretation that the tax shelter lacks economic justification.
Separately, individual taxpayers who used some of the structures have been able to settle their claims with the IRS through an amnesty program.
Moreover, many of the shelters were vetted by lawyers and other tax advisers, giving former KPMG officials another possible defense if they can show they relied on those professional experts and thus lacked the intent to break the law.

(more…)

Madison City Budget: Lisa Does the Math

Lisa S takes a look at the local Police Department’s budget communications vis a vis a 3% reduction (is this an actual reducation or a reducation in the increase?):

Personnel salaries and related expenses make up about 89% of the police department’s operating budget. The remaining 11% of the operating budget consists of minor objects and capital assets. Apparently, Chief Wray was either unable or unwilling to find any significant cuts within this other 11% of the budget.

Another interesting item in the 2005 budget is $1.6 million worth of overtime pay. When asked about the possibility of cutting overtime, one alderperson explained that this expense is hard to change because it is part of the negotiated union contracts. Chief Wray shares this sentiment

Energy Bill Offers Tax Breaks

Homa Zaryouni:

After five years of trying, Congress is expected to clear an energy bill this week that provides a range of incentives for consumers to rein in energy use.
Here’s how the energy bill could affect what we buy:
• Incentives to buy fuel-efficient appliances
• Incentives to buy hybrid vehicles
• The extension of daylight-saving time
• Expanded use of ethanol as a gasoline additive
• Reliability standards for power grid (aimed at preventing blackouts)
• Incentives for installing solar power at home

Madison’s Spending Challenge

Phil Brinkman summarizes the implications of the recently signed State budget on the City of Madison:

Dane County Executive Kathleen Falk said the limit on counties is “very comparable” to one she has insisted Dane County abide by in its budget. She predicted it wouldn’t affect county operations.
But Madison Mayor Dave Cieslewicz said the budget will force hard choices in Madison, which will be limited to increasing its levy to no more than 4 percent next year, below the 5.7 percent average of the last 15 years (emphasis added).
The city faces $9.5 million in increased costs to continue existing services next year, Cieslewicz said, but will be limited under the cap to collecting about $6 million more in property taxes.
Although the city is growing, police, fire, streets and other agencies would have to cut their budgets 2.1 percent from what it would cost to maintain the same level of services, Cieslewicz spokesman George Twigg said. The city could also raise fees and fines, as it has done before, or dip more deeply than usual into its “rainy day fund” to help cover the gap.

Madison’s 5.7% average levy increase over the past 15 years is not sustainable, given the State’s generally slow economy. City leaders need to start thinking different, rather than continuing with a “same service” approach.

The Coming AMT Explosion

John Buckley, Chief Tax Counsel – House Ways & Means Committee Democratic Staff published “The Tangled Web of the Individual AMT” (PDF). All taxpayers should become familiar with this stealth tax increase.

Fast Growing Companies Prefer a Flat Tax

Matthew Phan discusses the obvious benefits of a simplified tax system. We waste hours and hours on our current tax morass:

Of the 341 executives interviewed, 48% preferred a flat corporate rate over the current tax system for businesses like their own, compared to 16% who supported the current system. 13% preferred a value-added consumption tax and 23% indicated that they were uncertain which was better.
The complexity of the current system could be one reason owners prefer a flat tax, at least from the CEOs that Inc. interviewed separately. “The simpler the tax structure and the more visibility you give it, the better,” said David Steinberg, founder and CEO of InPhonix, the No. 1 company on the Inc. 500 list in 2004. “The more complex a system, the more accountants you need to hire.”