One of the main arguments that Scott Walker and his cohorts are using in their fight against taking transit, park, and EMS services off our property tax bills is that a sales tax would literally force consumers to drive to neighboring counties for purchases so they wouldn’t have to pay the extra money Milwaukee County might charge in sales tax.
My question: If that’s the case, and it’s such a driving factor in consumer purchasing decisions, why isn’t it happening already?
Ozaukee, Washington, Racine, and Milwaukee counties all currently have a 5.6% sales tax.
Waukesha’s is 5.1%, a full half percent lower.
According to County Executive Scott Walker and his right-wing talk radio sycophants, this should drive everyone looking to buy a washing machine or set of tires to Waukesha County and run those businesses in neighboring counties out of business.
And yet every Circuit City, Macy’s, and Firestone isn’t located in Waukesha County. Somehow, they manage to stay in business here in Milwaukee County even though you could spend $5 less on a washing machine in Waukesha than if you bought it in Mequon or Greenfield.
Odd, isn’t it?
I live in the Washington Heights neighborhood of Milwaukee, WI with my wife Jen, our daughter Emerson, and sons Carter and Colton.
And why hasn’t retail completely deserted Chicago yet? 10.5% sales tax I believe.
Good question Dan!
Surprising that none of your usual antagonists have chimed in yet…
Will increasing the county sales tax by 1% be the incentive for Milwaukee residents to shop in Waukesha? We’ll only find out if the tax increase goes into effect. Anecdotally, when I go to Chicago, I’m there for the theaters and the museums, I don’t go shopping. I avoid the absurd Chicago sales tax as much as possible.
One item you don’t address is the regressive nature of the sales tax—even if groceries and health care are exempted.
http://seattlepi.nwsource.com/local/103213_taxstudy08.shtml
I am one of those coservative business owning individuals that you may be referencing in your response. What concerns me is that many of the elected officials in this city seem to think a tax increase is the way to pay for everything. Businesses have a way of paying for things. Starts with a budget, capital plan and excecution of that plan. Does the county budget for restroom upgrades and maintenance? If not, why not? If so, where did the funding go?
I don’t think the taxes in Milwaukee county are forcing people to flock to Waukesha YET! Keep increasing the sales tax and it will happen. I’m sure all of the business owners in Milwaukee county would love to see the sales tax continue to rise. NOT! Business owners in Milwaukee county can’t help but think about moving the store every time our taxes go up.
Answer this. What other options are there? What if a tax increase is not an option. How would it get done then? Businesses have a way of getting things done without imposing a tax.
Hey James, it’s not a good question, in fact it is an inane question…just ask most of the employees at Miller Brewing Company – in case you didn’t hear, they’re leaving for Chicago. Why? Well because they’re willing give their businesses TAX INCENTIVES to come to their state and set up shop – to the tune of 20 million dollars.
My larger point being, the argument shouldn’t be 5.1% vs 5.6% but a mind set on how to properly manage money. RAISING taxes, especially a sales tax is by definition a regressive tax – affecting those that have less money (as Smitty has voiced several times). If the liberals in this area are so worried about the poor, than I would think they would be up in arms about a possible increase in sales tax, but low and behold, they’re not.
Lastly, and I’ve asked this question before, without an answer from anyone; how much is enough? People quote Chicago with their 10.5% sales tax, is that the goal? If so, you’ll see me buying ALOT of stuff in Waukesha county (ie: purchasing a $30,000 automobile – in MKE county at 10.5% = $3150 in taxes, WKSH with 5.1% = $1530, saving $1680 you bet your @ss I’m driving to Waukesha)
Sean,
Unfortunately you cannot save money on a car purchase by buying it in Waukesha rather than Milwaukee county. The sales tax is determined by where the car is registered not where it’s purchased.
I can guarantee you that tax incentives were also on the table from Wisconsin and Milwaukee if Miller/Coors decided to stay in Milwaukee. Denver would have also offered them tax incentives to headquarter there, so it’s a null point.
Secondly, the rank and file members of Miller didn’t have a say in where the company would base it’s headquarters.
You seem to be missing the original point. Scott Walker and friends have continually said that a higher sales tax in Milwaukee would lead to the collapse of business here since people would drive to Waukesha to save the $5 on a washing machine.
Why isn’t that happening today? Why isn’t every Best Buy in Southeastern Wisconsin located in Waukesha county if his argument holds any water?
The answer: Because it doesn’t.
And Smitty’s point about cars is correct.
A increase in the sales tax alone won’t ruin the economy of Milwaukee. It’s the slow but steady accretion of taxes, fees, rules, regulations, bureaucratic incompetence and indifference, failing schools and corruption that will do it.
Let’s hear it for the wheel tax!
Thanks for acknowledging that point finally Smitty. I also agree that a sales tax won’t ruin Milwaukee economy.
Now if only we can convince Scott Walker!
The Miller example is just that, an example. I realize the employees didn’t have a say, but I’m sure they’re not happy things are moving out of Milwaukee because in general, Milwaukee and the state of Wisconsin are not “friendly” – taxwise – to business. Also, I agree there probably was a tax incentive to stay, just not a COMPETITIVE one. That’s my point, about taxes and Wisconsin’s view on them. The sales tax alone, as both you and Smitty have pointed out, will not ruin the Milwaukee business economy, but that’s not the issue. The issue (and Scott Walker is keenly aware of this) is we need to understand what it takes to get new business to this area and equally as important, learn how to retain our current business. Coming up with new ways to tax people and businesses in the Milwaukee, or Wisconsin, area is not the answer and it is extremely detrimental. One of those types of taxes is the sales tax.
As for the car thing, correction noted, but it doesn’t change my more important point about it being a regressive tax on the less fortunate, and an ideology (tax increases), that if followed over time, will create less business opportunities and therefore will cause the economy, in this area, to go down.
Don’t mis-read me. When I say a sales tax won’t ruin Milwaukee’s economy by itself, I’m making the point that it would contribute to the progressive economic ruination of the county. Any tax increase, but especially a sales tax increase, will hurt the county’s economy.
I think it’s speculation Sean to say that we didn’t have a “competitive” tax incentive for Miller/Coors. The fact is we just don’t know what the state, city, and county were willing to offer.
At the end of the day, the decision of Miller/Coors to move to Chicago had very little, if anything at all, to do with taxes. From the moment they announced their plans to merge, they were saying that it was likely neither Milwaukee nor Denver would be the place where the headquarters would be located. I think that had more to do with corporate culture and making for a happy merger than taxes in either city.
If every company based it’s decision to locate it’s headquarters solely on the basis of what a potential host city had for “taxes”, every corporation in America would be based in Kissimee/St. Cloud or pretty much anywhere in Michigan (as an example).
Smitty, if your argument were correct, then every county or city that had a higher sales tax than Milwaukee would also be in ruin. The issues we face economically are much more complex than a 1% sales tax increase.
Dan,
I think you’re missing my point. I am using Miller/Coors as an example, in that Milwaukee and Wisconsin as a whole are not overly friendly to businesses, specifically as it relates to taxes. You may be right about the ultimate decision of Miller to go to Chicago, but the point remains that to get a company like Miller (although it’s only going to employee about 300-500 employees in Chicago) to your city or state takes extraordinary efforts, like I said before, to the tune of 20 million dollars in tax incentives. Talk about, and implement tax increases to businesses, and eventually you’ll see an economy weaken.
The big picture, in this global market is communities that offer tax benefits, reductions, and have a history of being friendly to businesses will obtain those companies that are looking to move and/or relocate. There will be, for the near future, quite a bit of consolidation, mergers, and acquisitions. This will create opportunities for communities around the country to “whoo” said businesses to their location to set up a new shop. If Milwaukee, in that competitive market, wants to be known as a tax increaser, not only say goodbye to more of our corporate HQ’s, but don’t even think anyone will want to come here.
Lastly, the point has been brought up several times by Smitty and myself, but I have not seen an answer or rebuttal to the following question: with the sales tax being a regressive tax and therefore more prone to affect the poor and fixed income folks, how can those that “speak” for them not think this is a bad idea, especially considering the increases in food and other necessities?
Dan,
If your arguement is correct than no corporation or individual ever takes state and local tax rates into account when making a decision on where to locate their business or find a job.
If that were true we wouldn’t be living in the “rust belt” and the South and Southwest wouldn’t be growing at a faster rate than the Midwest and Northeast.
A state like New York (where I used to live) has had a static population for the past 40 years. In fact, it would actually have lost population but for a huge influx of immigrants into the New York City metropolitan area. New York is the second highest taxed state in the nation (Connecticut is no. 1 and New Jersey no. 3—two more slow/no growth states).
Smitty, I’d take serious issue with the causes of the “rust belt” being attributed to taxes in American cities. It’s common knowledge that the reason there are “rust belts” in America is because manufacturing companies could make their products cheaper in foreign countries than they could in America.
That unfortunate decline has absolutely nothing to do with the tax rates in any of the affected communities.
Sean, about the “regressive” issues surrounding a sales tax, I’m glad you’re concerned about the well being of those less fortunate than many of us.
However, simply throwing a “it’s regressive” label on a sales tax increase doesn’t quite tell the whole story. After all, food, clothing, or prescription drugs are exempt from sales tax to alleviate the burden on the poor – that makes it more progressive of a tax if anything.
Some would argue that if all purchases would be subject to the same tax rate, the tax rate itself is flat because higher income people would pay more as they tend to consume more than those on the lower rungs of the economic ladder. That’s especially true when things items like those listed above are taken out of the equation.
If we want to talk about regressive taxes, and if you’re really that concerned about them, we should ask why people on the lower end of the ladder who tend to use public transportation more often are socked with fare increases like the 12% increase Scott Walker put forth for the Milwaukee County Transit system.
That’s a regressive “tax” and I would hope you’d be as concerned about it as you would be a potential increase in a sales tax if you’re really looking out for those poorer among us.
I’d like to add the City of Milwaukee created a $26 million TIF to move Manpower into the city and you don’t think we would of made the same or better offer for Miller??? yea right.
Further if MillerCoors was thinking about that tax rate don’t you think they would of picked Dallas? In fact their CEO explained it as a move based on marketing talent. oddly it was a creative class argument.