It is disappointing that neither candidate for governor is willing to have a serious conversation about tax reform, but that is not unexpected when we are five weeks out from an election.
The candidates responded to a study from the Milwaukee-based Wisconsin Policy Research Institute that found Wisconsin could boost its economy without bankrupting state government by cutting income and property taxes, while broadening its sales tax on consumer goods and services — including groceries.
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The study treads on some volatile political turf, presenting the elimination of 24 sales tax exemptions — including grocery store food, gas, construction labor, legal services, bottled water, fitness clubs, newspapers, coffins and funeral services — as a way to cut taxes while balancing the state budget. Taxing such goods and services would generate $2.3 billion in state revenue.
It also raises the possibility of replacing the sales tax with a gross receipts tax or value-added tax, which are used in Canada and many European countries.
Still, there are some very worthwhile ideas in this study that are worthy of discussion. Personally, I am in favor of shifting more of the tax burden to various consumption taxes, but I do not like VATs. A sales tax levied on the end consumer is more transparent than the VAT and less susceptible to political monkeying around.
First, you’re absolutely right about the quality of discourse in the gubernatorial race. I feel badly for those of you that have to watch that dreck. I told a friend awhile back that the Walker/Burke race reminded me of the Obama/Romney campaign. A campaign featuring an incumbent that nobody much cares for who goes negative early and often, and a challenger who is wooden and lacks charisma, but hopes that people will hate the incumbent just enough to get them across the finish line. Hardly the stuff that inspiration is made of.
The WPRI proposal is interesting. I like how they’ve included the concept of a refundable credit so as to mitigate the impact of applying a sales tax to categories of goods, like groceries and gasoline, upon which the application of a sales tax is severely regressive. On the whole, I think there’s a lot of merit to broadening the tax base.
That said, I think some politicians in Wisconsin still allow themselves to believe that Wisconsin’s lagging economy is something for which a change in tax policy is a magic bullet. There are some other issues in play there too. Wisconsin’s job mix is less than favorable, skewing industrial at a time when those jobs are increasingly tenuous. I don’t doubt that Walker’s 250k jobs number has fallen short in part because Wisconsin doesn’t have much presence in high-growth sectors. That’s not a Walker issue; it’s a systemic issue. And Wisconsin still lacks an urban center that can really serve as a draw for young, college-educated workers. In the year I’ve been up in the Twin Cities, I’ve met so many alumni of UW schools, and the answer is almost always the same. They’re here because the jobs are better, the pay is better, and the quality of life is better. And we’re all within driving distance of family.