· Cigarette Tax—The budget agreement increases the cigarette tax by $1.00 per pack on January 1, 2008. Combined with a tax increase on other tobacco products, tobacco-related taxes will rise by $411 million over the biennium. This revenue will be used to fund various health care initiatives.
· Hospital Tax—The agreement rejects the Governor’s proposal to create a new tax on hospitals. This tax would have cost hospitals $418 million, which proponents say would be offset by $575 million in additional federal Medicaid funds.
· Real Estate Transfer Tax—The budget eliminates the Governor’s proposal to double the real estate transfer tax—paid by the seller—from 30 cents to 60 cents per $100 of value. This provision would have added hundreds to the cost of selling a home.
· Vital Records Fees—Under the agreement, getting a copy of a birth certificate will go from $12 to $20, while a copy of a death, marriage or divorce record will also cost $20 (up from $7).
· Combined Reporting—The budget agreement rejects a Senate provision requiring combined reporting for corporate income taxation. The Senate’s budget would have required corporations engaged in a unitary business to file a combined report for state income and franchise taxes. Under this scheme, the income of non-Wisconsin subsidiaries could be attributed to and taxed in Wisconsin.
· Sales Tax on Digital Downloads—The agreement does not contain the Governor’s recommendation to impose the state sales tax on digitally downloaded materials such as music, books and software.
· Retirement Income Tax Exclusion—The budget includes a Senate provision creating an individual income tax exclusion for certain retirement income. The tax exclusion would be up to $5,000 per person (65 or older) and limited to taxpayers with adjusted gross incomes of $15,000 or less ($30,000 for married-joint filers).
· Healthy Wisconsin—The budget agreement eliminates “Healthy Wisconsin,” the Senate Democrats’ $15.2 billion universal health care proposal. The proposal would have been funded by a new payroll tax to be paid by employers (10.5% of Social Security wages) and employees (4.0%).
FJI Position: FJI vehemently opposed Healthy Wisconsin, as the plan is explosively expensive, and does little to address the root causes of rising health care costs, and will make our state a magnet for the unhealthy and uninsured.
· Health Savings Accounts Tax Deduction—The agreement rejects an Assembly provision to create a state income tax exclusion for deposits to and earnings on health savings accounts (HSAs). Wisconsin is one of four states taxes health savings accounts.
FJI Position: FJI has long supported an HSA income tax exclusion, which will further encourage the use of HSAs.
· Workplace Wellness Tax Credit– The budget rejects an Assembly provision to create a tax credit for workplace wellness programs.
FJI Position: While we did not take a position on this issue, we remain very interested in these kinds of consumer-driven health care initiatives.
· Tax Deduction for Health Insurance Premiums—The budget agreement includes a proposal to create a new state income tax deduction for health insurance premiums paid by employees. This deduction, which will eventually cut income taxes by nearly $150 million, will begin in tax year 2008.
FJI Position: Again, FJI did not take a position on this issue, but believes this provision will help the business community address the rising cost of health care coverage.
· Autism/Mental Health Insurance Mandates—The agreement rejects the Governor’s proposal to require Wisconsin health insurance plans to provide coverage for treatment of autism spectrum disorders. Additionally, the budget does not include a Doyle-backed provision to increase the mandated level of insurance coverage for mental health disorders.
· Transportation Fund Integrity—The budget agreement rejects the Governor’s proposed transfer of 16 General Fund appropriations to the Transportation Fund.
FJI Position: FJI strongly opposed this back door transfer. During the last two budget cycles, nearly $1.1 billion has been taken from the Transportation Fund to help balance the state budget. These transfers have forced the state to borrow money for transportation projects, leading to higher debt services expenses and a reduction in our purchasing power.
· Transportation Fees—The budget raises transportation fees by about $274 million. Next year, it will cost $24.50 more to procure a title, and the annual vehicle registration fee will go up by $20.
· Oil Profits Tax—The agreement does not contain Doyle’s plan to levy a 2.5% tax on oil company gross revenues.