Wednesday, January 04, 2006
Two bills to keep your eye on
Two pieces of legislation to make Wisconsin’s tax system fairer were introduced last month, and they deserve our attention -- one because it will directly help home care patients, the other because it could help fill the Medicaid funding hole.
The first bill would exempt over-the-counter medicines from the 5% state sales tax, which is now costing Wisconsin residents about $27 million a year. As more and more medicines that were once sold by prescription only become over-the-counter drugs, this change increases in importance.
The second bill would close a major corporate tax break known as the “Las Vegas Loophole” that lets Wisconsin corporations shift profits to states without a state corporate income tax. This usually involves setting up a dummy corporation in Nevada to avoid paying Wisconsin taxes. One scenario goes like this: I create a company in Nevada which exists as nothing more than paperwork and a PO box, then I "rent" the use of the name of my Wisconsin company (the real one) from the Nevada company (the fake one) for slightly more than my Wisconsin company's profits. "Poof!" goes by Wisconsin tax bill.
According to the Department of Revenue, the Las Vegas Loophole costs the state as much as $260 million a year. Think of the number of frail elderly and disabled in our state who could benefit from $260 million more in Medicaid home care services. The immorality of the loophole -- and the people who make use of it -- is staggering.
The first bill would exempt over-the-counter medicines from the 5% state sales tax, which is now costing Wisconsin residents about $27 million a year. As more and more medicines that were once sold by prescription only become over-the-counter drugs, this change increases in importance.
The second bill would close a major corporate tax break known as the “Las Vegas Loophole” that lets Wisconsin corporations shift profits to states without a state corporate income tax. This usually involves setting up a dummy corporation in Nevada to avoid paying Wisconsin taxes. One scenario goes like this: I create a company in Nevada which exists as nothing more than paperwork and a PO box, then I "rent" the use of the name of my Wisconsin company (the real one) from the Nevada company (the fake one) for slightly more than my Wisconsin company's profits. "Poof!" goes by Wisconsin tax bill.
According to the Department of Revenue, the Las Vegas Loophole costs the state as much as $260 million a year. Think of the number of frail elderly and disabled in our state who could benefit from $260 million more in Medicaid home care services. The immorality of the loophole -- and the people who make use of it -- is staggering.
