INTRODUCING AFSCME GREEN SHEETS - Last week’s legislative bulletin discussed several issues that AFSCME anticipates being at the forefront of the 2009-10 legislative agenda.  Today’s bulletin provides the first in an ongoing series of position papers, or AFSCME Green Sheets, on those issues that will be rolled out over the summer heading into the fall.  AFSCME will still provide updates on pertinent legislative issues when they arise (such as the Audit Bureau report on overtime discussed below), but the focus of this and future bulletins for the next several months will be on fundamental issues for public employees looking towards next session.

CORPORATE TAX DISCLOSURE - Recent news reports ballyhooed Wisconsin falling out of the top 10 “highest taxed” states in the nation, but those reports ignored the real story behind these suspect rankings, which are driven by ultraconservative think tanks with a blatantly big business agenda.

According to the Institute for Wisconsin’s Future (IWF), profitable corporations in Wisconsin have managed to shift more and more of the cost of providing needed services onto the shoulders of individuals.  In the early 1970s, big business paid for roughly half the cost of keeping our state going.  Today, they pay less than 30%, meaning that individuals have had to make up the difference.  In the mean time, corporations have re-focused the anger resulting from their success at tax shifting by blaming public service providers for rising individual tax rates.  Corporate interests have perpetuated the myth that Wisconsin taxes are out of line, when, in reality, Wisconsin spending levels are in the middle of the pack, and our number of public employees is below the national average on a per capita basis.  Instead of blaming public employees, citizens need to understand that they are paying more in taxes because clever corporations are paying less than their fair share.

Even more disturbing from IWF’s findings is that while corporations paid less and less in taxes they saw profits grow considerably during that same time period, even when adjusted for inflation.  In fact, since 1978 nationwide corporate profits more than doubled when adjusted for inflation from $694 billion to $1.446 trillion.  That Wisconsin has seen income taxes from corporations remain nearly flat, while corporate profits have increased so significantly, illustrates how corporations have avoided paying their fair share in Wisconsin over the last three decades.

The primary way corporations in Wisconsin avoid paying state income taxes is due to the proliferation of corporate tax breaks.  These tax breaks, some that are specific to certain corporations engaged in a specific industry, others available to a wide swath of Wisconsin’s business landscape, result in what is called corporate tax leakage.  Essentially, corporate tax leakage is the amount of money corporations would have paid in Wisconsin corporate income tax if they reported the same profits to the state Department of Revenue as they did to the federal government.  In 2006 alone, Wisconsin’s corporate tax leakage amounted to $643 million, an amount that was essentially shifted on to working families.

AFSCME, along with IWF and other partners, successfully lobbied for one of these corporate tax loopholes to be closed during the recent state budget adjustment bill.  The “Wal-Mart” loophole, allowed corporations to avoid state income tax by placing ownership of the land their businesses operated on in Wisconsin into an out-of-state subsidiary.  The subsidiaries, located in states with favorable corporate tax structures, would then charge high enough rent to their Wisconsin based stores to eliminate all profits earned in Wisconsin.

Closure of this loophole is expected to generate, at a minimum, $15 million in corporate tax revenues.  That number may be significantly higher, as it is difficult to ascertain exactly how many corporations operating in Wisconsin are taking advantage of this loophole.  Current state law limits public disclosure of corporate income taxes in Wisconsin.

While this was an important victory, it was only step one in creating real tax reform in Wisconsin.  There are many more loopholes that need to be closed in order to reach full tax fairness in Wisconsin, and a lot more information we need to find out how much tax is actually being shifted onto working families in the state.

That is why AFSCME is working to build support for the Corporate Tax Accountability Act (2007 Senate Bill 367), introduced by Senator Dave Hansen.  This act would require corporations in Wisconsin to publicly disclose their total gross income and their state income tax returns.  The act will allow a complete review of Wisconsin’s corporate tax structure, enabling us to determine how corporations are avoiding paying their share in the state, and what tax loopholes are most responsible for the tax burden shift to Wisconsin families.

This fall, when talking to candidates seeking legislative office ask them if they support the Corporate Tax Accountability Act and overall tax fairness for Wisconsin.

AUDIT BUREAU RELEASES OVERTIME REPORT - A 15% increase in overtime by workers employed at state institutions should come as no surprise, AFSCME notes in wake of a report on overtime costs by the Legislative Audit Bureau (LAB).

This week the LAB issued a report that showed that state agencies paid nearly $188 million in overtime, a 15% increase since 2005.  Most of the overtime involves staff at the state’s mental health institutes and in correctional facilities, which require round-the-clock staffing. 

The increase in overtime costs is a direct result of staff shortages. Since 2002, the state has been loath to advocate for staffing the mental health and correctional facilities at the levels necessary to run them safely, as well as to support the workers and keep the institutions safe. In addition, AFSCME notes, most lawmakers are reluctant to add staff and are skittish about committing to supporting the additional spending that more staff positions would require. 

Until the state recognizes that additional staff is needed in the institutions where inmates and the mentally ill require 24-hour attention, Wisconsin is going to continue to grapple with ever-increasing overtime costs.

AFSCME notes that missing from the LAB report and the news stories about “excessive” overtime is the fact that many staff do not welcome overtime but are forced to put in long hours, causing burnout and resulting in others leaving their positions, putting our institutions at risk. 

AFSCME will continue to work with lawmakers to address staffing shortages at Mendota, Winnebago, the Wisconsin Resource Center as well as Wisconsin’s many correctional institutions.

For more information, contact your AFSCME legislative representatives at 608-836-6666.