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State considers steep sales tax hike to eliminate income tax

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Wisconsin Governor Scott Walker (R-WI) holds a news conference at the state Capitol in Madison, Wisconsin February 25, 2011. REUTERS/Darren Hauck
Wisconsin Governor Scott Walker (R-WI) holds a news conference at the state Capitol in Madison, Wisconsin February 25, 2011. REUTERS/Darren Hauck

MADISON (WRN)   It’s something Governor Scott Walker “is considering,” according to Wisconsin Department of Administration Secretary Mike Huebsch. “For the first time in, I would say the last 20 years, this is getting much more discussion across the nation. And I think it’s being led by governors like Bobby Jindal in Louisiana who are trying to figure out ways that they can eliminate their income tax. That’s really the motivation here. They want to eliminate the income tax.”

Raising the sales tax is an idea some folks are talking about, but Huebsch says “the honest and in depth discussion of that is just beginning in Wisconsin,” though he says, “It’s about to hit the front pages.”

The state sales tax rate is currently 5 percent; Huebsch says adding 8 cents would allow the state to eliminate income taxes. ”If we were just going to eliminate the income tax and raise our sales tax to match that, we would have to raise it somewhere in the neighborhood of about 8 cents. We would have to go to about 13, maybe 13 1/2 cents in our sales tax.” Individual income taxes equaled $7.0 billion in 2012 in Wisconsin.

If the sales tax were to be expanded to items that are currently exempt, the proposed increase wouldn’t be as much. Food is not taxed right now and it’s “highly unlikely” it will be put on the table for consideration. Huebsch says there needs to be a discussion about whether to tax consumption or production — sales versus income.

Huebsch made his comments to a group of leaders from throughout the state, who were convening in Madison for a Wisconsin Counties Association Legislative Exchange. Governor Walker is scheduled to address the crowd Wednesday morning at 9:15 at the Concourse Hotel.

 

Editors note:  The Walker Administration says there is no active plan to replace the income tax with a higher sales tax. Cullen Werwie, Walker's spokesman, told talk show host Jerry Bader: "Governor Walker will propose a middle class income tax cut in the 2013-15 state budget. He considers this to be a down payment on continuing to drop the overall tax burden in Wisconsin in future years. He will review the impact of tax policy on job growth in other states as he considers future reforms."

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