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Regardless of what reality says, it seems like the big guns in the Wisconsin GOP want to have as many tax giveaways as possible. From Gov. Walker saying he'd like to consider lowering Wisconsin's income tax to 0% while his cabinet members hold closed-door meetings with "business leaders". It also includes Assembly Speaker/ALEC Cabin Boy Robin Vos hoping to tack on more income tax cuts in the Legislature early next year, somebody at the puppetmaster's headquarters has handed down the orders.

Well, a quick check of Wisconsin's budget indicates that if the state wanted to keep the same amount of revenues coming in (i.e., avoid even further cuts in state aid), the state's sales tax would have to be raised from 5% to 13.5%. So the Wisconsin Budget Project decided to look into how much this would change the amount of total taxes Wisconsinites would pay, and it shows that 80% of us would lose in a "0% income, 13.5% sales tax" Wisconsin, and pay more.

We're not even mentioning that paying taxes "out-of-pocket" (like sales and property taxes) are harder for people to adjust to than never seeing the money in the first place (like income taxes), so this policy is even more negative than it appears, particularly for the lower incomes. But of course, performance and reality have nothing to do with this. Like many other issues, Walker and Vos are merely doing a copy-and-paste of the ALEC agenda. GOP-run Kansas, Louisiana, and North Carolina have all suggested in the last year a similar "0% tax, higher sales tax" combination, and it was shot down once the proposal got put on paper and people could see the real effects of this kind of policy. And none of these states have seen large increases job growth since a modified version of these ALEC laws went into effect (in fact, Louisiana has consistently ranked among the worst economies in the Philly Fed index).

This policy truly makes no sense from a fairness or overall economic outcome standpoint, and is merely an excuse to funnel even more money to the richest Wisconsinites. It would compound what we've already seen in America over the last 35 years, where lowering tax rates on the rich increases inequality, and keeps the average worker's wages stagnant despite growing productivity.

As I showed earlier this week, among the 7 states with no income tax, there is little correlation between that and higher job growth, or higher incomes. The biggest correlation found is that 3 of the top 4 states for having people with no health insurance had no income tax, and given the Scrooge-like policies on Medicaid passed this week by the Wisconsin Senate and signed by Governor Walker yesterday, WisGOP seems to be more than OK with higher levels of uninsured for Wisconsin (we already had the highest increase in the amount of uninsured over the last 2 years).

We're not even mentioning the businesses that would be hurt by the higher sales tax, as they would likely lose customers. You think the giant outlet mall in Pleasant Prairie wouldn't see a major loss when a lot of their customers could get the same items at Gurnee Mills 20 miles away, and pay a whole lot less is sales tax? And it's also worth mentioning that the fastest-growing county with the lowest unemployment in Wisconsin is St. Croix County, right across the river from the Twin Cities. A large number of those people work in the Twin Cities, and it wouldn't take much more to convince them to not want to live in Hudson or the nearby area, given that their property and sales taxes will be going through the roof, taking away a lot of the incentive to stay a further distance away from their work. We already are well behind Minnesota in social policy and economic growth over the last 3 years, so why compound these disadvantages?

By the way, we already have tax cuts going into effect in Wisconsin, the Koo-Koo ones passed in the last budget. Sure, our income tax revenues look good right now, but this doesn't take into account that these numbers are artifically inflated, and not just because of our bubble-isicious stock market. A sizable amount of that 7.1% increase in income taxes is going away in early 2014 because the Koo-Koo tax cuts were so ham-handedly thrown together at the last minute, and the lower tax rates weren't able to be taken out of people's paychecks in 2013. The good part of this is that a whole lot of us will be getting larger-than-normal tax refunds this year, but maybe ALEC Vos should also wait to see just how much revenue drops out of the state's coffers in the first 4 months of this year before we go around asking for more cuts on top of them, and in making people pay more sales tax on anything they might buy with that higher-than-normal tax refund. If only 7% of that income tax increase since July is going to be refunded, we're back to the FY 2012-13 levels of income, and the breathing room that Vos claims makes further tax cuts a viable possibility becomes a whole lot less.

We already know Fitzwalkerstan's tax policy is already very Bush-like, where we blow and borrow away any one-time surpluses and leave us susceptible to massive deficits once the economy has its next downturn. If revenues revert to the budgeted levels over the next 19 months, the Legislative Fiscal Bureau projects we already have a $725 million deficit in store for 2015-17, with the one-time bursts of Act 10 cost moves and cuts in shared revenues to schools and local governments already having been used. Which of course means that if we cut income taxes even further, and economic activity halts to drive sales taxes down further, we'll have little choice but to make massive layoffs and privatizations that sell state assets and services off to private companies for pennies on the dollar.

Oh wait, that IS the ultimate end-game here, isn't it, just like it is in these other ALEC/GOP-run states? And that's why we need to step up and kill this zombie, trickle-down idea of 0% Wisconsin income tax in the grave before it rises out of there and starts to eat the brains of the public- which will make us have to cause a lot more destruction in order to get rid of the zombies later.  

Originally posted to Jake formerly of the LP on Sun Dec 22, 2013 at 06:47 AM PST.

Also republished by American Legislative Transparency Project and Badger State Progressive.

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Comment Preferences

  •  Seriously (13+ / 0-)

    The right wing loves to talk about revolting against the government.

    If there is ever such a popular uprising, it is going to be the fault of the selfish, narcissistic fools like Scott Walker, ALEC, and the rest of the cretans.

    The uprising will be led by the poor...not the right wing fools who scream about it now.

    ======================================================== Those who can, teach. Those who can't teach, make rules about teaching.

    by oxfdblue on Sun Dec 22, 2013 at 07:12:46 AM PST

    •  sadly, many poor will first fight for the 1% (11+ / 0-)

      I only wish there would be an uprising of the poor against the 1%.  But 25+ years of Hate Radio, Fox, Republican/prosperity Jesus and I have my doubts.  

      Just yesterday at my small SE Wisconsin post office, the lone female employee looks out at 11:08am, asks "anyone else?" then closes the screen.  It used to be two employees working, and had been open till noon on Saturdays, but there have been cutbacks.  Guy in his late 30s near me starts swearing as they close the screen and says "Would it kill them to stay open a minute past closing time? Fucking government employees."  I mention (casually, not confrontational) that its 8 minutes past the posted 11am closing, and the lady asked if there was anyone else.  Guy shoots me a dirty look, saying "fucking government is screwing the little guy" and stomps off to his maybe 15 year old rusty pickup.

      That (likely low income, probably Tea Party) guy would proudly stand up for Scott Walker & the Koch brothers. Odds are he would hate - I mean literally hate, maybe to the point of physical violence - any god damn liberal Democrat that tried to help him.  Doesn't make sense, but neither did poor Southern farmers going to fight and die for the aristocratic wealthy plantation owners who used (literal) slave labor to drive them off their small farms and into poverty.

      This is decades of emotional conditioning, and our logic (Lord knows I've tried to reason with conservatives) will make little headway.

      •  You can't reason with stupid (6+ / 0-)

          No sense wasting your time with that pile of trailer-trash you had to meet up with. And the comparison with poor Southern sharecroppers fighting for the Confederacy is a good one, because these people think they'll hit the lottery some day and can screw people just like the rich screws them today.

           Fortunately, they're only 20% or so of the population- they're just overrepresented on AM radio. What we need to do is forcefully reply to any lying claim the Wisconsin GOP will give over these next 10 1/2 months. We are in no way better off due to these policies and being left behind our neighbors (as shown by our recent ranking of 37th in private sector job growth in the year after the recall election, and 41st overall). And if Mary Burke won't do it, we should find someone else who will, because that's how you beat these guys.

           It almost makes me wish for another recession, because apparently these mediocre people need to feel the pain in order for them to understand just how badly trickle-down policies have failed them.

      •  Yes, very true (4+ / 0-)

        I would have written a longer comment and had said something to that effect...but didn't have the time earlier today.

        All we need to do is look at the South.  If voters truly voted in their own interest, there might not be a single Republican anywhere.

        ======================================================== Those who can, teach. Those who can't teach, make rules about teaching.

        by oxfdblue on Sun Dec 22, 2013 at 10:51:55 AM PST

        [ Parent ]

  •  It's not just the individual rate cuts... (10+ / 0-)

    ...that will result in bigger refunds.

    Corporate refunds will be larger as well as businesses crank through the Manufacturing and Agriculture Credit for the first time. The credit is first effective for tax year 2013. Most manufacturers would have left their estimated payments at prior levels until they see just how much their taxes will be reduced by the new credit.

    Let's take back Wisconsin!!!

    by A FIB in Cheddarland on Sun Dec 22, 2013 at 07:30:14 AM PST

  •  The headline will be in place (9+ / 0-)

    And the tragic results not yet in when Walker runs for Predidentn 2016.

    That is the real story here.

    Done with politics for the night? Have a nice glass of wine with Palate Press: The online wine magazine.

    by dhonig on Sun Dec 22, 2013 at 07:41:47 AM PST

  •  Some Dems have also floated the Regressive.... (6+ / 0-)

    ...National Sales Tax.

    Let's not forget that Speaker Pelosi once told Charlie Rose that a National Sales Tax may be on the table.

    And even today, many Dems support Regressive taxes on energy, such as a carbon tax or cap and trade.

    Nothing would please Republicans more than a tax on energy.  In fact, during the campaign, Romney's chief economic adviser would often pen op-eds calling for a regressive carbon tax.

    No one who cares about the working and middle-class can support regressive taxation, whether it be through a national sales tax, carbon tax or cap and trade.

    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

    by PatriciaVa on Sun Dec 22, 2013 at 08:12:39 AM PST

    •  Would it be a sales tax or a VAT? (3+ / 0-)
      Recommended by:
      Stude Dude, 3goldens, OrganicChemist

      Nearly all the major European countries have a VAT. Maybe a way to pay for single payer?

      "let's talk about that"

      by VClib on Sun Dec 22, 2013 at 09:04:57 AM PST

      [ Parent ]

    •  Carbon taxes aren't necessarily regressive (1+ / 0-)
      Recommended by:
      NoMoreLies

      Taxing carbon at a flat rate would be regressive in itself, but subsequently making a per-capita handout of the receipts would make it progressive (provided accounting is made for those who don't make enough to file a tax return).  Very roughly speaking, energy use will correlate with spending so those spending below the mean (i.e. roughly those with below-mean income) will benefit.

      Fake candidates nominated by the GOP for the recalls: 6 out of 7. Fake signatures on the recall petitions: 4 out of 1,860,283.

      by GeoffT on Sun Dec 22, 2013 at 05:47:21 PM PST

      [ Parent ]

  •  Tipped, recced and republished to (7+ / 0-)

    I started with nothing and still have most of it left. - Seasick Steve

    by ruleoflaw on Sun Dec 22, 2013 at 08:25:42 AM PST

  •  Good piece, Jake. n/t (3+ / 0-)
    Recommended by:
    OldJackPine, 3goldens, AnnieJo

    I dreamed I saw Joe Hill last night, alive as you and me.

    by plankbob on Sun Dec 22, 2013 at 09:18:59 AM PST

  •  Ditching income taxes (10+ / 0-)

    and replacing them with higher sales taxes is basically just a backdoor way to implement a highly regressive flat tax on people.

    Few people buy into the whole flat tax thing in general, hence why it hasn't been implemented.  But tell people we're ditching income taxes and replacing them with a tax a person thinks they can control by controlling their spending blinds them to the reality.  Most people don't seem to get that consumer spending, for the most part, cannot be all that controlled, because you need to purchase many things simply to survive since we are no longer hunter-gatherers.  You are forced to spend, and as such, are forced to be taxed via the regressive sales tax.

    A truly progressive society would do just the opposite - ditch sales taxes and any other regressive tax, and increase income and corporate taxes in a progressive manner to compensate for the lost revenues.  This leaves more in the hands of consumers to drive the economy, while reducing the amount of stagnant money held by wealthy money changers.  As such, it would be helpful to begin to address our income inequality problem - though it is not the only thing needed to address that issue, and by itself would not fix it.

  •  Koch Money Might Do it/ Prop 13 in WI Future? (3+ / 0-)
    Recommended by:
    Habitat Vic, GeoffT, NoMoreLies

    Kohn money defeated Feingold, and gave us a "know-nothing" like Ron Johnson.

    For that reason I no longer trust Wi voters to see through lies when it comes to the voting booth.

    Coming from CA, and the Prop 13 experience, I can see a scenario where property taxes have to be raised to off set loss of income tax revenue, which in turn taxes seniors out of their homes. Then a Prop 13 like bill which limits property taxes will be introduced in the legislature to help poor home owners.

    In CA we had Prop 13 and then Son of Prop 13 which severely limits property tax revenue causing hardship in communities up and down the state. The worst of the results of these bills came years later as revenue kept dropping.

    We must be the change we wish to see in the world. - Gandhi

    by left of center on Sun Dec 22, 2013 at 12:54:30 PM PST

    •  Cuomo (1+ / 0-)
      Recommended by:
      NoMoreLies

      just pushed through a property tax cap like that here in NY.  Sadly, it isn't just conservatives pushing that poison - the 3rd Wayers do it as well.

      Progressives in the state recognized the danger of a cap, and pushed for a "circuit breaker" solution instead.  Cuomo would have none of it, even though a properly implemented circuit breaker would have provided immediate relief for those who needed it most, like the elderly.

      It seemed few in this state were able to look at the long term end result as shown by what has happened to California municipalities being starved of revenue after a few decades under a cap.  When the damage finally does become apparent, Cuomo will likely be long out of office.

    •  Different form of Prop 13 here (0+ / 0-)

        First of all, because we don't do much "legislation by initiative" here, and second, because many of our local governments are put under property tax limits by our legislature (it's tied in with their state aid).

         Now that being said, I could certainly see the WisGOP clowns continue their trend of cutting state funding while keeping strict revenue caps in place for the locals and the schools. In fact, it seems to be their strategy, probably because it leads to privatization and governmental dysfunction. Still hasn't stopped property taxes from going up in much of Fitzwalkerstan, however (we're up $150 this year, for example).

  •  What would end up happening (1+ / 0-)
    Recommended by:
    NoMoreLies

    I predict that if they did this, they'd end up losing business at he edges of their state.

    Also, as the budget needs more money, they will begin to enact higher business fees and similar taxes.  The money needs to come from somewhere, so they'd just begin getting it piecemeal.

    Streichholzschächtelchen

    by otto on Sun Dec 22, 2013 at 01:07:56 PM PST

  •  Thanks, Jake (nt). (1+ / 0-)
    Recommended by:
    AnnieJo
  •  We live in WI, but close to MN. (1+ / 0-)
    Recommended by:
    Jake formerly of the LP

    We usually shop in Eau Claire (50 miles from our house) because the sales tax is 5.5%. We could shop in Red Wing MN (40 miles from our house), but the sales tax in MN is 6.875% (except MN doesn't tax clothes). If the WI sales tax goes up to 13.5%, we will be taking all our shopping business to Minnesota. 13.5% is insane.

    Gay farm boy, 21, who hit the city to go to college, WI-03 (home, voting), WI-02 (college), -5.88, -3.64, "No tears. Remember the laughter, stories and good times we shared."- My dad (1959-2013).

    by WisJohn on Mon Dec 23, 2013 at 07:30:34 PM PST

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