Excess is Another Word for Surplus
Wisconsin is projected to have surplus revenue of $6.6 billion by the end of the fiscal year, June 30. There is an additional $1.5 billion in revenue growth projected from tax collections in the 2023-2025 fiscal year. Tony Evers describes this as an “unprecedented opportunity to make critical investments in Wisconsinites and the future of our state.” This tells us nothing.
We have learned the excess in tax collections would position our state to fund every government agency request over the next two years. Agencies are requesting an incredible $3.6 billion in new general-purpose revenue beyond their base funding levels.
These requests would boost state spending by 7.9% in year one and 2.5% in year two. Ballooning the size of government is the last thing we need.
Tony Evers plans to spend $2 billion more on public schools in his next budget. Fewer than 50% of their students are achieving grade level in reading and math, the fundamentals they will need to be successful, independent adults. He makes no mention of outcomes being tied to the increased spending.
Politicians rely on the unnecessary complexity of government and our complacency to maintain control and escape accountability. Tony Evers and legislators on both sides of the aisle are all puffed up about all this money in the coffers and their only disagreements are how to spend it. They want us to believe it’s a good thing. They disregard the fact this is our money. We must insist the excess is used to create sustainable, structural improvement.
We need real tax reform in Wisconsin. The tax structure must create the conditions that make our state attractive. Businesses and individuals move about freely in today’s world and they go where the opportunities are greatest. Competitiveness matters. Here are some things we all should understand.
Most states are making bold moves to increase their competitiveness. Over the past decade, twenty-five states have lowered their top income tax rates. Iowa is aggressively reducing its top tax rate to 6% (ours is 7.65%), which will leave Wisconsin and Minnesota with the highest marginal income tax rates of all non-coastal states across the country. This is important because 95% of Wisconsin businesses are “pass throughs,” which means the business profits pass through to the owner’s individual tax returns. 2/3 of those are paying the highest marginal rate on their incomes. While politicians often use division as a strategy – pitting the haves against the have nots - business ownership is the American dream, and it drives our economy for everyone. It’s a lie to suggest most businesses are big. They are the family businesses that populate our state.
Wisconsin ranks 27th on the Tax Foundation’s 2022 State Business Tax Climate Index, primarily because our individual, corporate and unemployment taxes drag us down. Corporate and individual income taxes are the primary drivers of economic growth and a greater percentage of our taxes come from individual and corporate taxes than most of the nation.
It would be easy to venture too far into the weeds on a subject as complicated as taxes. As individuals, we don’t have to be experts on the subject to know what we expect from elected officials.
Utilize the excess revenue to invest in real tax reform that rebalances income, corporate, sales and property taxes, and catapults us to the front of the line on competitiveness.
Require simple language and explanations we can all understand.
“Absolutely not” to funding more agency requests or more school funding. We need to shift our focus to measurable results.
The level of engagement we will need to take our state back will not be PhD level stuff, but it will be more than social media tweets and posts. We’re up to the task. Our freedom depends on it.