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Fund Public Education Through Corporate Taxation

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Message Andy Ambler

The Madison Metropolitan School District (MMSD) is facing a $30 million shortfall for the 2010-11 budget. To add to the bad news, an assessment prepared by Durrant Engineering indicates that the district faces approximately $86 million in "pressing maintenance needs."According to the budget summary, "Since 1993, the Madison School District has created efficiencies and made reductions in programs and services totaling approximately $60 million. Over that 17 year period, these reductions and efficiencies were necessary for the school district to work with annual expenditure increases that outpaced allowable revenue increases under state law." The document goes on to note, "Madison Schools is receiving a 15% reduction ($7.8 million) in school aids from the state for 2010-11. This is after a similar 15% reduction ($9.2 million) in school aids to Madison Schools for the 2009-10 year." On Monday, March 23rd the Madison School Board voted unanimously to claim $4 million in tax authority granted by voters in a 2008 referendum, plus another $7.7 million allowed under revenue caps. That closes the budget gap to $18.1 million which includes $1.2 million in cuts that still need to be made and a remaining budget hole of $16.9 million.When local school boards are faced with these deficiencies, they can make up the difference by further increasing property taxes, cutting costs or a combination of the two.

Meanwhile, in the midst of the continued recession, the city is discussing a public investment of $16 million in Tax Increment Financing (TIF) subsidies to fund the remodeling of the Edgewater hotel. With our school's infrastructure crumbling and threats to close schools being mounted every budget cycle, Mayor Dave Cieslewicz thinks that putting public funds toward a bloated Lake Mendota waterfront project should be Madison's priority. And with funding for public education shrinking year after year, it's no wonder the city granted an additional $227,000 above and beyond their original request of $58.5 million for the Madison Police Department's 2010 budget. Once candidate for Madison mayor, Burt Zipperer, stated at the public hearing, "spending caps on schools - what isn't covered under spending caps? Security. Because they realize if you are not going to meet kids needs, you better have security, and lots of it." Which, according to the 2010 police budget, translates to additional positions in what they refer to as the "innovative, new Crime Prevention and Gang Unit" and adds approximately 15 new police vehicles for the MPD fleet.

There is another elephant in the room that is being ignored when considering how to make up for the state's budget shortcomings. That elephant is more like the fat cat corporations that seem to continually get away annually without paying corporate income taxes to the state of Wisconsin. In fact, if Wisconsin corporations were paying taxes at the United States average, this would annually generate approximately $1 billion in additional revenue for state and local governments. According to research by Dollars & Sense magazine back in 2007, they found that "among corporations with more than $100 million in revenue, more than 60% paid no state income tax."These companies include Wisconsin-based Kohl's, Harley-Davidson and Johnson Controls. While other non-Wisconsin offending companies include corporate giants like Kraft Foods, McDonalds, Microsoft and PepsiCo. Another startling statistic reported in "Wisconsin's Revenue Gap" by Institute for Wisconsin's Future in 2007 is that "during the decade from 1996 to personal income taxes rose 47%, sales taxes rose 52% and homeowner property taxes grew 62%. But corporate income taxes grew only 23%."

Wisconsin residents should look to the example set by voters in the state of Oregon. In January, Oregonians voted and passed Measure 66 and 67. Measure 66 raises taxes for a household earning more than $250,000 ($125,000 for individuals) and eliminates income taxes on the first $2,400 of unemployment benefits received in 2009. Measure 67 raises the business minimum tax, corporate profits tax and raises the $10 corporate minimum tax to $150, a law that had been unchanged since 1931. Both of these measures effectively raise an estimated $727 million to provide funds for public services.The passage of these measures demonstrates that the working class are fed up with suffering through budget cuts and send a message to the rich that they should pay their fair share of taxes.

The Institute for Wisconsin's Future put out a catalog of tax reform options for the state in 2008. There are 3 progressive measures that could provide the biggest relief for working class taxpayers in the midst of a recession that is showing no signs of going away in the immediate future. The first measure would be to increase the top marginal tax rate from the current 6.75% up to 7.75% on Wisconsin's higher income earners - taking a page of Oregon's playbook. The second measure would be to tax 100% of capital gains, as does the federal government. Wisconsin now excludes 60% of capital gains on assets held more than one year. The third measure would be to eliminate the itemized deductions credit, which mostly benefits higher-income taxpayers because they tend to have higher deductible expenses. In 2006, 9% of filers had income of $100,000 or more and 97% of them benefitted by receiving 54% of their taxes reduced by this credit.

With 17 years of continued budget cuts and balancing acts compounded with the reality of $86 million in "pressing maintenance" necessary for the crumbling schools of the Madison Metropolitan School District, it is clear that we need to revolutionize the way we fund our public schools.

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I am activist with the Single Payer Action Network (SPAN) in Madison, WI. SPAN is a group of action-oriented activists and organizers working to promote a medicare-style health insurance system for all Americans. SPAN members believe that national (more...)
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Fund Public Education Through Corporate Taxation

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