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As chair of the Ways and Means Committee, Rep. John Macco has held five public hearings on taxation in Wisconsin. In an interview with the Wheeler Report, Macco said the hearings were an opportunity for the committee to understand the tax structure in Wisconsin, allowing all the committee members to have a fundamental understanding of where the revenue comes from, who pays it, how it’s handled, and where it goes. Macco said he was glad the committee concluded by having the Towns, Villages, Municipalities, and Counties testify last because it brought everything together. Macco emphasized that he thought the committee hearings were a success, saying committee members had excellent questions, and it deepened everyone’s understanding of the issues.
When asked about putting together a package, Macco said, “The whole premise of this process was that prescription without diagnosis is malpractice. We are in the process of figuring out what areas aren’t functioning optimally. Because it is an integrated, across the board, program than includes all the revenue for the state to function and take care of its citizens, it almost has to be done collectively, as one comprehensive strategy. For every action there is an equal and opposite reaction. As we go through the process we would end up with the same patchwork mess that we have now by tweaking one thing, but not the other. It is my hope that we can come to come a conclusion that establishes a comprehensive functioning tax structure to take us into the next century.” Macco went on to explain the reason tax reform has failed in the past is because people have worked on the edges of the issue but have never taken a comprehensive approach. “We have to be bold enough to look at the entire comprehensive process.”
Macco highlighted that he was impressed with the amount of commonalities between both the Republican and Democratic parties in the taxation discussion. Macco said, “I think we both recognized what some of the problems are and now it’s a question of if we can come to some comprehension on what the solution is.” Macco said there was a lot of interest in the lower income tax bracket and the ramifications for individuals who are working their way up. Macco was surprised by the progressive versus regressive conversation. During one meeting, Rep. Taylor brought up the Who Pays? A Distributional Analysis of the Tax Systems in All 50 States by the Institute on Taxation & Economic Policy from January 2015. Macco said that study was helpful in coming to an understanding that “contrary to popular belief” Wisconsin ranks 37th on the regressive scale.
When asked about the reaction to taxation on food, Macco said everyone has things that they understand and can speak intelligently about, and he emphasized that he understood taxation of all kinds. However, he highlighted that not everyone understands all the different types of taxation. Macco said everyone goes to the grocery store so everyone has experience with taxation on food. The WI Grocers Association testified on food taxation and visually explained how two items next to one another on the same shelf could be taxed differently. Macco said the committee members really understood how difficult and convoluted food taxation could be.
Rep. Kerkman raised concerns during one of the meetings about taxation across borders. When asked, Macco said that when the committee begins to look at some of the nexus issues the question will become whether the tax is on the person or where it was bought. Macco highlighted that some of the conversations going forward will have to discuss internet sales and boundary issues.
Macco admitted the biggest challenge going forward would be the size of the project. When asked about legislative leadership thoughts, Macco said everyone agrees the state can do better with its tax code. Macco added that leadership is not saying yes or not since there is not a concrete proposal for them to evaluate at this time. Macco is encouraged that the original plan was to take a two year look at taxation, but he feels that if they can do it now they should go ahead and do it now. Macco admitted that he would like to see a proposal move forward and be part of the budget in April, but acknowledges he is not in charge.
Macco said he enjoyed the informational hearing process because people of both political parties were willing to have the conversation about taxation in Wisconsin. Macco said it didn’t take a lot for people to agree on what the problems were, the next step is defining the solutions. Macco emphasized that while this discussion is new to some people, he has been working on this issue for over two years and he’s excited to be working towards a solution.