Many years ago, Wisconsin legislators realized that they had a hard time saying “no” to tax exemptions requested by special interest groups. In order to try to keep the tax code from resembling Swiss cheese, lawmakers enacted a statute in 1963 creating an extra hurdle or layer of oversight for tax exemption bills.
This evening the Wisconsin Assembly approved by voice vote a bill to repeal that statute. Passage of that legislation, AB 641, was a foregone conclusion because committees in both houses had unanimously recommended its approval. I’ll be somewhat sorry to see the statute eliminated, but the way the committee has worked in recent years makes it hard to argue against its repeal.
The law that was enacted almost 53 years ago established the Joint Survey Committee on Tax Exemptions, and required that any legislation creating or affecting a tax exemption must be referred to that committee. Neither house of the legislature may vote on the bill unless the joint committee has issued a report regarding the proposal’s legality, its state and local fiscal effect, and “its desirability as a matter of public policy.” The committee is comprised of nine members: three legislators from each house and three public members, including the Secretary of the Department of Revenue.
Like the Joint Finance Committee, the tax exemptions committee creates an extra speed bump for legislative proposals and brings together legislators from both houses to play a special role for the full legislature. But the Joint Survey Committee on Tax Exemptions (JSCTE) goes even further by including three non-legislators with tax expertise. The goal was to create a committee that could focus on the principles of good tax policy, with less distraction from political pressure.
When I worked in the state Capitol in the 1980s and 1990s, the tax exemptions committee was a place where many proposals were derailed. Although I didn’t follow the work of the committee closely at that time, I think it served a useful purpose by essentially creating some institutional bias against the proliferation of special tax breaks. Perhaps my memory on that is clouded, but what seems pretty clear now is that the JSCTE currently serves little purpose; it routinely approves new tax exemptions without a public hearing or meaningful debate. As a result, almost no one is defending the continuation of the committee; in fact, five of the six legislators who serve on it were authors of the memo that was circulated to seek cosponsors of the legislation (AB 641 & SB 502) to repeal the committee.
I suppose some legislators feel that the Joint Finance Committee (JFC) can serve much the same purpose of screening tax exemption legislation as the JSCTE. I hope they’re right, but the JFC is probably the most unbalanced committee in the legislature (with three-fourths of its members from the majority party), and it doesn’t provide the sort of outside expertise on tax policy that the JSCTE offered.
Legislators in both parties often talk about wanting to have fewer tax loopholes and a more even-handed tax code that doesn’t pick “winners and losers.” I think the imminent demise of the JSCTE raises serious questions about whether that’s what legislators actually want. It appears that they no longer see much value in having a committee that was designed to slow down the approval of tax exemptions. But the proliferation of new tax breaks for special interest groups makes me think that the committee’s intended role is as important as ever, which is why I think it’s regrettable that the tax exemptions committee was no longer serving its intended purpose and will soon be eliminated.
From www.wisconsinbudgetproject.org.