The governor's sweeping tax law changes would trade the current income tax revenues for a higher sales tax rate. The idea is to cut taxes, which is a hallmark characteristic of this kind of governing agenda. It sounds good on paper, and people usually respond favorably to the notion of paying less in taxes. The problem is, that this notion has an inherent disconnect. And a state like Wisconsin, that relies on taxation in the absence of revenue streams from tourism or fossil fuels, must have sufficient tax revenue to fund the state's needs. Cutting taxes has become a "one size fits all" solution for those adopting agendas like that of Scott Walker. The real problem, unobserved by Mr. Walker's agenda, is that the money still has to come from somewhere.
Governor Walker says he will swap the sources, and fund the treasury with the highest sales tax in the nation. If you like paying less in taxes, this is not a very good solution for most people. In fact, it's worse than that. Most of us pay the majority of our taxes in sales taxes.
The Walker plan would actually increase the amount paid in taxes by almost everyone in the state. Eighty percent of Wisconsin's citizens, in fact. The notable exceptions are these: Those earning in the top 20 percent income bracket would be the only ones to pay less in taxes, as a percentage of income. The top one percent would benefit the most, paying the least in taxes. The bottom 20 percent would be punished the most, paying an increase of 5.4 percent more than they are currently paying in taxes.
The Walker Agenda: What It Really MeansThroughout this analysis we have referred to the Walker agenda. It is time to examine just what that agenda is. A group known as the American Legislative Exchange Council, or ALEC, has organized much of this agenda and proudly claims it as its own. With specifically scored tabulations they have evaluated the degree to which different states conform to their agenda.
ALEC's propagandistic intention is to confirm the legitimacy of its agenda by pointing to the successful economic picture found in the highest-ranking ALEC-conforming states. Unfortunately for ALEC, the so-called successful states conforming to ALEC guidelines--Texas, Florida, Nevada, North Dakota, and Arizona--are successful for reasons other than policy approach. They are successful financially not because they cut taxes according to the ALEC agenda, but because they have substantial revenue streams from tourism or natural resources that permit them the luxury of cutting taxes. Wisconsin is not that lucky. Like Alabama, Mississippi, and Virginia, there are no overwhelming revenue streams from sources other than taxation. Taxes fund their governments. Period. Cutting taxes in this atmosphere cuts government funding. Period.
According to the ALEC one-size-fits-all approach, cutting taxes is the order of the day, largely because it benefits the wealthiest portion of the population. But if you are not in that group and you think this is starting to look a little shady, well, it's worse than that. There also appears to be a heavy negative correlation between following the ALEC agenda and job creation as determined by relative state rankings. Those most closely following ALEC predominantly have the worst records for job creation. Ooops!
According to ALEC's own figures, as found in their publication, "Rich States, Poor States," states were ranked according to their projected economic outlook for 2013. In this agenda-driven ranking, Wisconsin fares favorably with a ranking of 15th, up from 30th. Even Mississippi is 10th. And Minnesota, with its more liberal agenda, lags in 46th place. Why? Well, that's a good question.
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