My column for the Washington County Daily News is online and in print.

Ever since Republicans took control of the state Legislature in 2010 thanks, in large part, to anger over the massive state deficit that Democrat Governor Jim Doyle and the legislative Democrats had created, the legislative Republican majority has built fiscally responsible budgets that ran surpluses. Despite increasing spending every budget, the Republicans managed to bend the cost curves to ensure that all bills were paid while leaving plenty of change. Republicans have since filled up the state’s rainy day fund with billions of dollars and the state’s finances are stronger and more stable than they have ever been thanks to Republican fiscal management. Last week, the Legislative Fiscal Bureau issued its regular report about the state of the budget and projected surplus or deficit. The estimate is based on projected macroeconomic conditions and current state policies. Once again under Republican fiscal leadership, the LFB is projecting that the state will end the current budget in June of 2025 with a budget surplus of $3.15 billion — about $550 for every man, woman, and child in Wisconsin.

 

Let me write that another way: The state of Wisconsin is overtaxing every man, woman, and child in the state by about $550 and refusing to give any of it back. For the average family of four, they will be unnecessarily taxed $2,200 above and beyond the needs of government as expressed in the budget.

 

Noting this overpayment, the Republicans want to give the taxpayers their change and adjust the tax rates to reduce the amount of overpayment. Legislative Republicans passed their third attempt at a tax cut last week that would reduce income tax rates to bring the level of taxation in line with the amount of money that the government is actually spending. Yes, the spending is still too much, but Wisconsinites are still being taxed way more than even the spending justifies.

 

Democrats in the Legislature voted against this tax cut just like they voted against the last two tax cuts. Governor Evers vetoed the last two tax cuts and will probably veto this one too. Democrats refuse to give the Wisconsin taxpayers their change after funding government.

 

Why are Evers and his fellow travelers refusing to let Wisconsinites keep their money to afford the exploding cost of living despite government being fully funded? Simple. They do not think it is your money. They think it is their money and they want to spend it on things that they want.

 

Dressed up in the language of fake compassion, Evers and legislative Democrats have offered dozens of ways to spend the surplus instead of giving it back to hardworking Wisconsinites. They have proposed spending it on child care welfare, pouring more billions into the black hole of the government education complex, corporate welfare to big business to pay for paid leave and worker training, creating new government bureaucrats like the Office of State Employee Engagement and Retention, and all manner of spending.

 

All of the Democrats’ spending proposals have two things in common. First, they were not in the state budget. They are just more ideas to spend money after the budget was completed and signed into law by the governor. Second, every one of the spending proposals is designed to be spent on, or filtered through, the Democrats’ favored people. As the money flows, Democrats and their liberal constituencies throughout Wisconsin will get their beaks wet in a stream of tax dollars that were forcibly and unnecessarily taken from hardworking Wisconsinites.

 

If you are not angry about that, you should be.

My column for the Washington County Daily News is online and in print. Here’s a taste:

Wisconsin currently has four income tax brackets. Under the Republicans’ plan, they would reduce it to three brackets and reduce the rates on all three remaining brackets. Simply put, everyone who pays state income taxes would benefit from paying less.

 

While the Republicans push for a tax cut and the Democrats oppose it, let us remind ourselves of why it is necessary. As this column recounted last week, Wisconsin is facing an existential threat to its economy and ability to fund government. People are leaving the state. Wisconsin is now losing population. One of the reasons is that the inherent mobility of the modern workforce means that people are moving to states that provide a good quality of life and a lower tax burden. The income tax is a big part of that.

 

This fact is particularly true for high-income people. Low-income people already do not pay much, if anything, in income taxes. According to those same Department of Revenue statistics, the bottom 40% of income taxpayers (474,050 filers) paid an average of just $303.80 in income taxes. That only includes people who earned enough to file taxes. Nobody is going to move to another state to save $303.80 in taxes. But for the top 40% of tax filers, who are paying thousands of dollars every year in state income taxes, the math is different. This is especially true for tech-sector professionals where remote work has become the norm. Retirees have been fleeing the state for decades in search of lower taxes and warmer climes, but the advent of the remote technical workforce has made this choice viable for professionals in the middle of their careers.

 

This column has long advocated for abolishing the state income tax. It can be done. It should be done. But it will not be done because neither elected Republicans nor Democrats have the will to do it. As a second choice, a true flat income tax would set Wisconsin apart and catapult it into the upper echelon of attractive tax states for mobile affluent professionals. As a third choice, the Republicans’ current proposal is a step in the right direction. It will not move the needle substantially, but it will help.

 

As it stands, even with this tax cut, the current budget proposals still increase state spending by at least 10% over the previous budget. That is an abomination that explains why taxes will not be reduced further.

Here is my full column that ran in the Washington County Daily News earlier this week.

In my last column before Christmas in 2013, I climbed back on my old hobby horse to once again advocate for eliminating Wisconsin’s income tax and replacing some of the tax revenue with an increase in the sales tax. Eight years later almost to the day, former Governor Scott Walker is leading the charge with a group of tax reform groups to do exactly that. Armed with a study by Noah Williams at the University of Wisconsin-Madison’s Center for Research on the Wisconsin Economy, Walker and fellow reformers say that it is time for Wisconsin to become the 10th state without a state income tax.

 

Our government extracts money from all of us in myriad ways. Most state governments get the majority of their revenue from the income tax and the sales tax. In Wisconsin, those two taxes account for 84% of general purpose revenue in the state budget with the income tax filling 52% of the state’s general purpose revenue bucket.

 

The model used in Williams’ study shows that state government could maintain the same intake of revenue after eliminating the state income tax if it increases the state sales tax from the current 5% to 9.43%. But the sweet spot for the overall benefit of the state is to increase the state sales tax to 8% after eliminating the income tax. While this would result in a 12.55% decrease in state revenue, thus requiring spending cuts, it would increase economic output by 7.93%, employment by 6.87%, consumption by 7.19%, and, perhaps most importantly, increase average after-tax income by 9.35%.

 

One of the primary reasons cited by the study for eliminating the income tax is to make Wisconsin more competitive with other states. Our society is more mobile than ever — particularly for the middle and upper classes. People weigh a lot of things when deciding where to live, where to work, or where to start a business. Whether or not there is an income tax is one of those important factors. People are voting with their feet as Wisconsin exports people to states like Florida, Texas, and Nevada. Wisconsin already has an uphill battle to attract workers, retirees, and entrepreneurs with brutal winters, high taxes, and a steep regulatory burden. Eliminating the state income tax would encourage people to take a harder look at Wisconsin when deciding where to live, work, and play.

 

Beyond attracting more people to move to and stay in Wisconsin, the sales tax is fairer than the income tax. By its very definition, the income tax is only paid by people who earn an income. It is a tax on earning a living that the idle rich, the idle poor, and the intentionally unemployed do not have to pay. It is a tax that only those people who jump out of bed every day to go to work have to pay to support state government.

 

The sales tax, on the other hand, is paid by anyone who spends money on goods and services. It is paid by the rich lady who buys her fourth home, the middle-class family buying a used car, and the unemployed twenty-something buying beer for the weekend. Everyone pays, which spreads the tax burden more equitably across all Wisconsinites.

 

Furthermore, it is much more difficult for politicians to manipulate the sales tax to favor or punish people. With the income tax, politicians have created a labyrinth of a tax code that gives breaks to the people they like and punishes those who they do not. Other than exempting particular goods or services, the sales tax is more resistant to political maneuvering.

 

While I strongly support eliminating the state income tax for a hundred reasons, such a move does not correct the biggest problem with state funding. The question of how we fund state government is less important than what we are funding. Wisconsin state government taxes so much because it spends so much. Every single state budget in my lifetime has increased spending from the prior budget.

 

Irrespective of the economic cycle, which political party is in power in Madison, population trends, or the ability of Wisconsinites to pay, state spending always goes up. It is more predictable than the tides. Until we control state spending, we will never take meaningful steps to lower the tax burden. All we are doing is finding better ways to pay.

 

*** For my fellow Christians who are celebrating the Birth of Christ this week, I wish you all a very Merry Christmas.

My column for the Washington County Daily News is online and in print. Here’s a taste. Merry Christmas!

In my last column before Christmas in 2013, I climbed back on my old hobby horse to once again advocate for eliminating Wisconsin’s income tax and replacing some of the tax revenue with an increase in the sales tax. Eight years later almost to the day, former Governor Scott Walker is leading the charge with a group of tax reform groups to do exactly that. Armed with a study by Noah Williams at the University of Wisconsin-Madison’s Center for Research on the Wisconsin Economy, Walker and fellow reformers say that it is time for Wisconsin to become the 10th state without a state income tax.

 

[…]

 

While I strongly support eliminating the state income tax for a hundred reasons, such a move does not correct the biggest problem with state funding. The question of how we fund state government is less important than what we are funding. Wisconsin state government taxes so much because it spends so much. Every single state budget in my lifetime has increased spending from the prior budget.

 

Irrespective of the economic cycle, which political party is in power in Madison, population trends, or the ability of Wisconsinites to pay, state spending always goes up. It is more predictable than the tides. Until we control state spending, we will never take meaningful steps to lower the tax burden. All we are doing is finding better ways to pay.

My column for the Washington County Daily News is online and in print. I sound a warning bell about a push for a new kind of tax. Here’s a part:

The city of Appleton was one of the first municipalities in Wisconsin to implement a wheel tax. Now, in what might be the start of a new tax trend, they are considering implementing another new tax after finding that the wheel tax is not generating enough tax money to cover their spending.

 

[…]

 

What is a transportation utility fee? Invented in Fort Collins, Colorado, in 1984, a transportation utility fee is based on the rationale that the transportation infrastructure functions as a public utility like the water, sewer, or electricity systems. As a utility, users of the transportation system are charged based on their consumption of the system. Also, conveniently for the taxing authority, utility fees are not subject to the same strictures as taxes and can be implemented with more impunity by the local government.

 

Unlike water, sewer, and electricity, however, there is not a good way to actually measure the consumption of the transportation infrastructure without tracking each individual’s movement on the roads. Absent the technical, political, or cultural feasibility of always having the government tracking everyone’s movements (that might be coming), a government that wishes to implement a transportation utility fee must use proxy distinctions to divvy up the fee.

 

[…]

 

If we are to treat our transportation infrastructure as a utility, then we must also rescind all of the other taxes and fees that are levied to pay for our transportation infrastructure. Our transportation infrastructure is either a utility to be funded through user fees or it is a public good to be supported through general taxes. It cannot be both.

Here is my full column that ran in the Washington County Daily News last week.

The Legislative Fiscal Bureau released two memos last week with very similar numbers about two separate items. The first was about tax collections. The second was about tax expenditures. They tell a story about government and governance in modern America.

 

The first memo was about how money from the Coronavirus Relief Fund is being allocated. As part of the first big coronavirus stimulus bill passed by Congress in March of 2020, the state of Wisconsin was allocated $1.99 billion from the CRF to be used to cover unbudgeted expenses related to the pandemic by government entities. The memo details how the CRF money is being spent on things like health care facilities, payments to hospitals, contact tracing, and other logical things that were directly impacted by the pandemic. The memo also details how the CRF money is being spent on things like movie theater grants, broadband expansion, corporate welfare to ethanol producers, higher education funding, and a nice $233 million bucket for “state agency reimbursements.”

 

The use of CRF money is a perfect example of government and governance operating poorly. The CRF was designed as a gigantic slush fund to take tax dollars from all Americans in the form of federal taxes to be paid by future taxpayers to give to state and local governments in the present. By law, the money must be spent by the end of this year or it must be returned to the federal treasury. That is why the money is being poured into pet projects like broadband expansion, state agencies, and government education systems. Whether they actually need the money or actually incurred pandemic- related expenses is immaterial. What is more important is that the state spend the money before the deadline.

 

One part of the CRF rules is telling. In order to facilitate “administrative convenience,” government school districts can spend up to $500 per pupil without being required to document the specific uses of the spending. The money will be arbitrarily “presumed to be eligible.” This amounts to $410 million in additional government spending that may or may not have anything to do with the pandemic.

 

The second memo that the LFB released had to do with a surplus in tax collections. When the Legislature wrote the budget in 2019 before the pandemic, they estimated that the state tax laws would collect about $17.6 billion in taxes for the general fund. The preliminary final estimate shows that the state actually collected $19.6 million in taxes. The state collected about $1.9 million more in taxes than they thought they would.

 

Bearing in mind that the original estimate did not take into account the pandemic, the surplus tax collections are astounding. In the 2020-2021 state budget, the Republicans in the Legislature fought off Governor Evers’ attempt to raise taxes and cut them instead. The result is what we generally see when government cuts taxes — tax collections go up.

 

The simple reason for this is because money is taxed when it moves. When people have more money in their pockets because taxes are lower, they do not bury it in the backyard. They use it. When they spend it or invest it, the money is taxed, thus resulting in higher collections. In particular, the greatest contributor to the tax surplus was higher corporate income tax collections. Corporations took their tax cuts, invested them back into their businesses, and grew taxable profits.

 

There is a point at which cutting taxes will result in lower tax collections because the economy is already flush with money, but all indications are that the state of Wisconsin could still enact large tax increases and still see tax collections increase. This is because Wisconsin’s tax burden is already much higher than it should be to balance tax collections with economic movement.

 

The tax surpluses are an example of government and governance doing something well. The Republican tax cuts put money directly into the pockets of taxpayers and business owners without going through layers of government bureaucracy and expense. The result was that tax collections went up and the state could provide almost the same amount of relief as they received from federal taxpayers in the CRF.

 

The LFB’s two memos highlight how cutting taxes not only results in more taxes being collected, but they also render politicized and bureaucratic relief funds unnecessary by just letting taxpayers keep the money they earned.

 

The best government is the government that governs least.

My column for the Washington County Daily News is online and in print. Here’s a part:

My column for the Washington County Daily News is online and in print. Here’s a sample: