Hidden Handouts to Corporations Found in Walker’s Budget

The almost $200 million in tax cuts that Wisconsin Governor Scott Walker has given to corporations have been both lauded and hated by the public and media. When it was discovered that businesses like M&I Bank and others who were large contributors to Walker's gubernatorial campaign were receiving extra provisions through changes in the consolidated reporting law, questions started cropping up about why Walker was giving handouts to corporations even though he declared the state broke.

Robert Kraig, Executive Director of Citizens Action of Wisconsin, revealed on the Sly in the Morning show on WTDY in Madison, Wisconsin that Walker's budget changes two important parts of the 2009 Consolidated Reporting law that will greatly lower, or even eliminate, taxes paid by corporations in Wisconsin.

Right now, the "Department of Revenue now has the authority to investigate any groups who are created for tax purposes and to disallow them if they are for the purpose of tax avoidance," said Kraig.

One of the changes in the budget will wipe out the ability of the Department of Revenue to investigate or disallow these subsidiaries.

A Democrat-led legislature passed the 2009 law that closed the "Las Vegas Loophole" in Wisconsin. This "loophole" allowed corporations to start smaller companies in states like Nevada with looser tax laws for businesses.

Before and after the law was enacted, corporations were allowed to "carry over" investment losses from the year before and deduct the maximum amount from their tax return. If the loss was more than the maximum, they could take the remaining amount and carry it over to the next tax year. After the 2009 law passed, the carry-overs could only be from 2009 and after.

Walker is changing this as well. Information from Jack Norman of the Institute for Wisconsin's Future explains that the budget makes this carry-over practice retroactive. Instead of getting rid of the law altogether, he allows corporations to include losses from before 2009 and deduct them.

With Walker's decree that Wisconsin is now "open for business," the changes in the law come as no surprise, especially since many of the businesses that will profit from this change were big contributors to Walker's campaign.

John "Sly" Sylvester, on his show summed up this political maneuver by Walker best when talking with Robert Kraig.

"In other words, he [Walker] makes combined reporting null and void without having to pay the political consequences of repealing it."