Taxpayers: Thanks for rebate, but where's the rest?

Associated Press Writer

MADISON, Wis. (AP) Taxpayers eagerly flooded lawmakers with calls after the Legislature approved the governor's sales-tax rebate plan, asking when the checks would arrive and how much they would be worth.

Now that most of them have their checks, people are realizing there is something missing from the state's income tax forms this year: $410 million in property tax and rent credits.

Gov. Tommy Thompson vetoed the tax breaks to help pay for the $700 million in rebate checks. That leaves a hole where some taxpayers expected to find relief.

"We were misled about the whole thing," said Chuck Howard, a 63-year-old bank officer and big-band leader from Brookfield. "There was this big to-do about sending us a great rebate check.

"But now I go to my accountant who tells me I can't get credit for taxes I paid on property. That's just not right."

The credit removed from this year's tax forms previously allowed people to receive a credit from taxes paid on property or rent paid during the tax year.

In 1997, the average credit was $136 and could have been as much as $200. After a one-time increase in 1998, the amounts would have been similar in 1999 had they not been removed, the Legislative Fiscal Bureau said.

The credits have been eliminated for tax years 1999 and 2000 and can only be restored thereafter if the Legislature and Thompson agree to put them back in.

An Associated Press review of fiscal bureau numbers last fall found that the rebate plan, coupled with income tax and other relief, gave the average Wisconsin couple $74 to $110 less over two years than what they would have received under the Legislature's budget plan.

That proposal included the property tax and rent credits.

Thompson acknowledged there have been complaints but said upcoming income tax cuts and other measures that kick in this year make the entire $1 billion tax relief package worth it, even with the missing credits.

"They're only comparing the rebate to the property tax rent credit," he said. "And, yes, there will be winners and losers. But when you look at the entire plan, you are definitely going to come out much better."

However, some taxpayers complain that the one-time rebate checks, which average $271 and range from $184 to $534, are often smaller than the tax credits they would have received the next two years.

Howard, for example, received a rebate check of $385. He said he would expect a property tax credit of $180 a year, nearly wiping out the benefits of the rebate check.

Plus, he said, there's no guarantee that lawmakers will ever reinstate the credit meaning taxpayers could lose money down the road, Howard and other critics say.

"Everybody likes the cash in hand, but it's not a good deal for everybody," Howard said.

That includes others who received smaller rebate checks, which are based on how much money they made in 1998, and pay rent or higher property taxes.

"I don't think the rebate was a wise thing," said Betty Roehsner of Pewaukee, a 79-year-old who received $193 and estimates she would have received significantly more from the tax credit over two years.

"The taxpayer has lost in the long run. (The credit) is never going to be put in again, or at least not until the Legislature does a budget again."

Roehsner said she would have preferred keeping the credits in place and using any extra money for education or other programs.

Several lawmakers said they have heard unhappy constituents, with many calls coming from elderly people whose rebate checks were lower than their credits because they don't make much money.

Republican Rep. Steven Foti's office reported receiving a couple dozen calls from taxpayers concerned about the missing tax credit, while Democratic Rep. Marlin Schneider said: "We're hearing about it."

"People are beginning to figure this out. This is a tax hike all the way around," said Rep. David Travis, a Madison Democrat who voted against the rebate plan.

Some offices are referring calls to the governor's office. The Legislature's version of the budget included the property tax rent credit, but was vetoed by Thompson when he proposed the rebate.

Thompson said the credit had to be removed to pay for the rebate plan, if it was going to be part of the larger tax relief package.

"They don't take into consideration that they're also getting a permanent income tax cut," he said. "They don't take into account that there will be increased exemptions and itemized deductions that increase the amount of tax relief they will get.

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