In Governor Jim Doyle’s first budget back in 2003, he pinpointed “the values, the priorities, and the choices that should define Wisconsin’s budget.” This year Doyle is dismissing his own guidance, assembling a budget full of detrimental fiscal policies. Here’s what he said in the past, compared with what he wants to do now.
“No state tax increases—in order to grow Wisconsin’s economy.”
In 2003 Doyle acknowledged keeping taxes low is necessary for economic growth. He now prefers to ignore this time-tested approach, and instead borrow the budget playbook from Michigan, which is dealing with yet another huge deficit and boasts the highest unemployment rate in the country. Michigan is increasing already burdensome taxes, refusing to cut bloated government spending, and forgoing fundamental budgetary reforms.
The nonpartisan Tax Foundation reports Wisconsin’s state and local tax burden ranks ninth highest in the nation, and its business tax climate is 38th. Doyle’s proposed tax increases will worsen Wisconsin’s rankings and the state’s economy. As Michigan has demonstrated, such fiscal practices create larger, longer-lasting deficits that stall economic recovery and leave big bills for future taxpayers.
Having already raised job-killing business taxes over the next three years by $215 million, Doyle’s new budget includes an additional $1.4 billion in tax hikes on the Internet, the “rich,” businesses, tobacco users, and others. That will take more money out of the economy where it would otherwise be invested, to start or grow businesses, hire more employees, or be spent by consumers.
“Control state spending—in order to bring the budget into balance, both now and in the future.”
Spending has ballooned under Doyle. The first budget he signed, in 2003, totaled $52.15 billion, while his latest proposal is a hefty $62.76 billion. That’s a 20 percent increase over six years. Are Wisconsinite receiving 20 percent better government?
On a positive note, the governor wants to cut the wasteful and inefficient motion picture tax-credit program. Unfortunately, his proposed cuts do not go nearly far enough to return spending to a sensible level.
“Distribute the sacrifices fairly—because we’re all in this together.”
In this year’s budget address, Doyle promised to “protect the middle class against tax increases.” That’s a good idea—for all classes of people. Raising taxes on various groups—including those struggling at the lowest income levels and those who create jobs—is downright reckless. A good tax structure is low, flat, broad-based, and non-distorting. Doyle’s plan to “tax the other guy” by raising regressive “sin” taxes on tobacco users, business taxes on job-creating companies, and income taxes on the “rich” is a toxic tax mix that further weakens the state’s economy.
“Fix the budget right, and fix it once—so we can move beyond the ordeal of budget-cutting to the task of growing Wisconsin.”
Doyle and the legislature have continually failed to implement any long-term budget fix–such as creating a tax and expenditure limitation–and have instead kept spending beyond their means. Raising taxes and borrowing more money are the worst things to do, especially during an economic slowdown. Instead the state should eliminate wasteful “economic development” subsidies, privatize non-core functions of government, reform unfunded pension and health-care liabilities, and enact sensible tax and spending limits.
Wisconsin’s high taxes are shoving business owners out of the state. That means job losses and higher deficits to come. Governor Doyle’s budget will choke the state’s economy even further. The governor should listen to his own advice: Cut tax rates, control spending, and fix the fundamental problems in the state’s budget.
John Nothdurft ([email protected]) is a legislative specialist for The Heartland Institute.
This op-ed was originally published in the Milwaukee Journal Sentinel.