Amid recurrent complaints about Wisconsin’s tax climate and accusations that the state bashes business, the Institute for Wisconsin’s Future several years ago documented (PDF) a rather different story.
“Almost fifty thousand corporations filed tax returns with the Wisconsin Department of Revenue in 2005. Two out of three returns showed a bottom-line tax of zero dollars,” the Institute found in a 2007 report.
This isn’t necessarily a case of criminal tax evasion, but perfectly legal tax avoidance under various state loopholes, noted the Institute — a liberal think tank that seeks to provide a counterweight in the marketplace of ideas to right-wing policy shops like the Heartland Institute or the Wisconsin Policy Research Institute.
One of those loopholes was the ability of some companies to impute profits to an out-of-state operation beyond the reach of state tax collectors. The report helped build the case for Combined Reporting in determining business taxes, which reined in that particular tactic. Combined Reporting took effect two years ago under Gov. Jim Doyle.
The report got its information directly from corporate tax returns. But which companies actually enjoyed the no-tax bonanza that the Institute found in its research? The organization’s report didn’t directly list them by name.
That’s because of a state law governing the data.
The statute grants access to the net income tax paid, payable or delinquent owed by individuals or corporations, so long as the requester fills out appropriate forms and pays a $4 fee for each tax return.
Disclosure is trickier. The requester can refer directly to the information in a public speech. And if a newspaper obtains the tax information lawfully, it’s allowed to publish what it finds:
Except as provided in subs. (4), (4m) and (10), no person may divulge or circulate or offer to obtain, divulge or circulate any information derived from an income, franchise, withholding, fiduciary, partnership, limited liability company or gift tax return or tax credit claim, including information which may be furnished by the department as provided in this section. This subsection does not prohibit publication by any newspaper of information lawfully derived from such returns or claims for purposes of argument or prohibit any public speaker from referring to such information in any address.
So on paper the Institute has generally avoided naming individual companies. Instead it has pointed out broad trends and published aggregated data in print, while research director Jack Norman would only dish details at a public news conference.
There have been a few, limited exceptions. A couple of years ago, after Mercury Marine in Fond du Lac won labor concessions in the face of its threat to leave the state, an Institute analysis (PDF) noted its parent, Brunswick Corp., hadn’t paid state income taxes from 2000 to 2007, despite profits in all but one of those years. But in a footnote, the Institute noted restrictions on disclosure and appears to have demurred from publishing more specific data it might have gleaned from the tax filings. (It did publish public data from annual reports and company proxies, which didn’t include the state tax numbers.)
Not everyone has been as cautious on disclosure as the Institute. One Wisconsin Now, a liberal advocacy group, researched and published data on the taxes and income of former Gov. Tommy Thompson and U.S. Senate candidate (now elected) Ron Johnson.
“We think it’s important that this be in the public domain,” OWN’s executive director Scot Ross tells Pressroom.
For the IWF, however, the inability to lay all the data out in a report may be one reason that media coverage of the Institute’s findings has been sketchy. More likely is the fact it goes against the deeply ingrained narrative that Wisconsin is a Tax Hell for business.
Now the Institute has launched a new strategy to allow it to name names directly – and it’s enlisting a couple of labor newspapers in the process.
IWF has started a monthly online newsletter called Who Does Not Pay Taxes? The debut issue (PDF) takes a look at Associated Bank’s history of zero taxes against $2.6 billion in pre-tax profits from 2001 to 2008. It also includes information about recently acquired M&I Bank, which the Institute says paid $29 million in state income taxes from 2002 to 2007 — less than 1 percent of its $3.9 billion profits in the same period. And a provision in Gov. Scott Walker’s budget allows M&I to use its 2008 bank losses to offset profits anywhere in the company, which IWF says could let M&I avoid state income taxes entirely for years to come.
But given its interpretation of rules on disclosure, how did the Institute manage to go public with such specific data?
On its website, IWF explains that the organization
works within those restrictions in order to move the information into the public domain. For example, previously unreleased data are first published by two newspapers, in accordance with the restrictions. The papers are: the Milwaukee Labor Press and the Union Labor News (Madison).
“We do the research, provide it to those two newspapers, and then publication on their web sites puts it all into the public domain,” Norman explained in an email.
You can see how the Labor Press covered it on its website here.
Meanwhile, Pressroom Buzz is watching to see how the change affects media coverage. So far it’s a mixed bag. Last week, a Journal Sentinel story on Associated Bank’s profit rebound didn’t mention anything about the bank’s ability to avoid state income taxes. On the other hand, a Madison Capital Times item by Mike Ivey covered it – and M&I’s information, too — in detail. (The Cap Times noted that Associated didn’t deny the IWF’s numbers but asserted it had complied with all state laws in calculating its taxes.)
Norman declined to make any criticism of media coverage. But it’s clear the Institute’s expectations go beyond traditional news channels.
Said Norman: “We’re expecting this new e-pub to gain its readers the old-fashioned way: by spreading person-to-blog-to-website-to-Facebook-to-person.”
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Say Cheese! It’s an old newspaper maxim that cute pictures of kids can help you sell more papers – at least to their parents. The Milwaukee Neighborhood News Service is borrowing a leaf from that tactic.
The nonprofit news service plans to send photographers to Thursday night’s Weed & Seed National Night out this Thursday, at Clarke Square Park, 2330 W. Vieau Place, from 4 to 7 p.m. (National Night Out is a crime-prevention campaign aimed at building neighborhood spirit and strengthening police and community relationships.)
The pictures will be uploaded to the news service’s web site where they can be downloaded for free. (Kids under 12 must be accompanied by an adult.)
And if it gets a few more people to take a look at the neighborhood news service’s web site, so much the better.
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