It's hard to catch criminals without cops. And it's hard to catch tax evaders without tax auditors.

With Wisconsin facing its most difficult budget challenge in decades, the Institute for Wisconsin's Future (IWF) has a new report showing that increased investment in the state's Department of Revenue (DOR) could generate a substantial increase in tax collections without raising tax rates.

The report, titled "Investing in Revenue: How Wisconsin can profit by using the Minnesota model for closing the tax gap," shows how Minnesota used investments in its tax-enforcement capabilities to raise nearly one billion dollars since 2002, without raising tax rates.

Every dollar invested in building the tax-collecting capacity of Wisconsin DOR could return eight dollars in additional revenue for the state.

Increasing staff in the department's audit and collection operations would be the core of a more aggressive approach to collecting taxes that should be paid but are not. This money would help reduce the need to cut state services or increase state tax rates in order to produce a balanced budget for the 2009-2011 biennium.

Bolstering DOR enforcement capabilities would not only generate additional revenue, but also would make the tax system fairer for those who already pay their taxes on time.

However, Wisconsin's tax-collecting capacity has been eroding. 2008, for example, one out of every four jobs authorized in the 2001 DOR budget had either been eliminated or left vacant. By contrast, during the same period Minnesota was investing in the capacity of its revenue department. Minnesota's investment paid off, in the form of $900 million in additional revenue through enforcement activities, not tax increases.

See the full report at: www.wisconsinsfuture.org/publications/taxes/Press Releases/DORreport_1.09.09PR.pdf.

Once again, elected officials have pounced on a report by the Tax Foundation to mislead taxpayers into thinking that Wisconsin can't afford to adequately fund its public institutions.

The latest cases are Rep. Steve Nass (R-Whitewater) and Sen. Mary Lazich (R-New Berlin), who separately cited a new study by the Washington, D.C.-based Tax Foundation, claiming Wisconsin is among the top ten states in tax effort. Not so! Indeed, the latest U.S. Census Bureau data show that taxes and fees for state and local government are 3% lower in Wisconsin than the national average. The national average is $5,803 per person; Wisconsin's figure is $5,607.   Read More »