Left Wrong on Kooyenga Tax Reform Plan

June 11, 2013

by James Wigderson
Special Guest Perspective for the MacIver Institute

Listening to some on the left, any moment Bruce Willis and group of misfits are going to need to fly in the space shuttle to destroy the fiscal meteor threatening Wisconsin. Governor Scott Walker’s plan for a tax cut in the proposed budget was enough to cause our friends on the left the vapors. Now that State Rep. Dale Kooyenga’s even larger tax cut is included in the state budget, it’s the end of the world.

Jack Norman in the Milwaukee Journal Sentinel is our latest example of the doomsayers. Norman predicts that the Kooyenga tax cut, if passed by the legislature intact, will cause the end of Wisconsin’s fiscal future as we know it.

“Our state is dealing with dismal growth in jobs and wages and with declining standards in schools and municipal governments. Kooyenga’s proposal would make things worse.

“His is a good idea only if the real goal is to permanently undermine state government. Maybe wholesale privatization is what Kooyenga really wants. Then let him declare it openly instead of trying to sneak it in through a sugarcoated cut in taxes.”

I love the part where Norman wrote, “Maybe wholesale privatization is what Kooyenga really wants.” If we’re going to debate tax policy, Norman should stop throwing the foo-foo dust of some imagined motives where he tries to paint his opponents as Snidely Whiplash.

Norman wants us to believe that nobody could be for lower taxes unless they have some other motive. However, if we keep the debate to tax policy, Norman might learn that there are good reasons for lowering taxes – even more than what’s been proposed.

Let’s start by putting the proposed tax cut into perspective. The total tax cut will be $651 million over two years. Sounds like a lot, but in one three-day period, Democrats and former Governor Jim Doyle raised taxes $1.2 billion. The 2009-2011 state budget raised taxes by over $2 billion and it still fell short, requiring a budget repair bill shortly after Governor Scott Walker took office.

Norman claims, “Wisconsin’s overall state and local taxes and fees are at the midpoint among the states, no matter how rankings are calculated,” as if that’s supposed to make Wisconsinites feel better about how much of the family income is taken by the state. Well, Norman is correct only if you have a very broad midpoint that only excludes first and last place.

The Tax Foundation currently ranks Wisconsin 43rd overall when it comes to taxes, 46th for personal income taxes. That’s not the midpoint as Norman claims, that’s abysmal. Illinois still has a lower tax burden despite the tax increases of recent years.

If anything, Republicans are being timid in their tax cutting. We should be repealing the entire Doyle-era additional tax burden that’s keeping a jackboot on the throat of Wisconsin’s economy.

Norman also makes the claim that the current surplus is the result of bad federal tax policies under President Obama resulting in a one-time surge in revenue that we will not be able to rely upon for future budgeting. Actually, I threw in the “bad” part. Norman probably thinks higher federal taxes are fine.

This may be a Wisconsin first where a liberal is unwilling to take advantage of temporary revenue that was the result of the federal government. Doyle built a state budget on one-time federal revenue from the so-called federal stimulus. Democrats wanted to build a train on one-time federal funding while ignoring the commitment to ongoing costs. Even now, Democrats and liberal special interest groups are calling for the state to expand its Medicaid program largely on the unlikely possibility that federal money will just keep rolling in to fund the expansion.

However, let’s assure Norman and our liberal friends that the tax cut will not be funded by a one-time surge in tax revenue. As a recent memo from the Legislative Fiscal Bureau points out, if Wisconsin has just 3% growth, the same growth we’ve experienced for the last decade, the state will have a $500 million structural surplus at the end of the budget cycle, and that was under Kooyenga’s even larger originally proposed tax cut.

This isn’t even Supply-side economics. It’s simple math.

But Norman would have the state of Wisconsin keep the taxpayers’ money and continue the pre-Walker era policies of tax more and spend even more. Wisconsinites have been paying, and overpaying, for too much government spending too long. The proposed tax cut only begins to address that problem.