Wisconsin’s estimated current $5 billion deficit defies quick fixes. It did not happen overnight. However, a report from the union-dominated Institute for Wisconsin’s Future and the Wisconsin Council on Children and Families says it can be fixed in one year by delaying some tax cuts, raising others and taxing things that are not taxed now.
The report calls it “tax reform,” but it is really a menu of tax hikes. Other states facing such large deficits might ask state employees to work one free day per week, offer early retirement or extend a fiscal year to another quarter to improve revenue. Wisconsin, the report says, is not trying to raise enough revenue so we should pay higher taxes.
Democrats, who now have a majority in the Wisconsin House and Senate thanks to union money and volunteers, say that raising taxes that you and I pay should be a last resort. That is a Wisconsin resort which Democrats will visit.
How did we get here? When Jim Doyle was elected Wisconsin Governor in 2002, Wisconsin faced a $3.2 billion shortfall. Doyle blamed it on former Governors Tommy Thompson and Scott McCallum. Low-hanging spending fruit was picked. Gradually, the Doyle Administration “borrowed” from other funds to paper over subsequent operating deficits. Last year, the Governor and legislature raised fees $763 million on registering cars, getting vital records, dry-cleaning clothes and applying to public universities.
The big ticket tax hikes put forth in the report are raising the state sales tax to six percent ($850 million), extend the sales tax to business and professional services ($468 million), bring back the sales tax on motor fuel ($403 million), eliminate state income tax refundable credits ($321 million), eliminate the marriage credit ($275 million), increase the top rate of the state income tax from 6.75 percent to 7.75 percent ($180 million) and reinstate Wisconsin’s inheritance tax ($120 million).
In my case, whatever I save from lowering the state income tax in my bracket could be more than offset by higher sales taxes. A Princeton University study says Wisconsin citizens with higher incomes than mine vote with their feet to leave the state to be replaced by citizens with lower incomes. That means that tax increases will never yield as much as promised.
Families struggling to pay bills, buy food and put gas in the car, cut back where they can. Increasing their taxes penalizes them and increasing taxes on their employers might cause more workers to lose their jobs, too. Republicans will find new backbone in the minority to stand with families. Raising taxes is a sure way for Assembly and Senate Democrats to become the minority again in 2010.