Could Liberals and Conservatives Agree to Reduce Special Tax Breaks?

There has been a great deal of political discussion this year about the state and federal deficits. Putting aside the matter of whether it’s good economic policy during a severe recession to incur more debt at the federal level, the fact of the matter is that a large portion of the electorate believes that deficits have gotten too high and need to be reduced.

In light of the increased concern about red ink, could the next session be a time when state and federal policymakers take a much closer look at “tax expenditures” (or special tax breaks)? Will those tax breaks be on the table along with other spending measures, as budget writers strive to bring revenue and spending into balance?

Walker Recommends Eliminating Corporate Taxes

Wisconsin policymakers will have to grapple next year with a deficit of roughly $3 billion, and that number could grow higher in the months ahead. A deficit of that size would be a huge challenge even if some candidates weren’t promising to roll back tax increases adopted in the last budget.

The Milwaukee Journal Sentinel reported Monday that Scott Walker has now suggested going even further in making deep tax cuts, by eliminating corporate income taxes altogether. In response to a questionnaire from the Metropolitan Milwaukee Association of Commerce, Walker said he favors repealing corporate income taxes. Such a change would cost the state more than $800 million each year.

What Candidates Aren’t Saying About the State Budget

Campaign season is upon us, and that means calls by candidates to cut state spending significantly in order to close the gap in the state budget, currently estimated at $3 billion over the next two years. What these candidates don’t say is that trying to balance the budget through cuts alone will likely drive up property taxes and reduce services that are critical to well-functioning communities.

An issue brief released today by the Wisconsin Budget Project, based on new spending figures put out by the Wisconsin Department of Administration last week, examines two main characteristics of our state budget that make major spending cuts particularly painful.

State Tax Revenue Grows 5.5 Percent in First Quarter

The Wisconsin Department of Revenue issued preliminary figures on Friday for tax collections in the first quarter of the current fiscal year, July through September. Tax revenue was up 5.5 percent in that 3-month period, compared to the same period a year earlier.

Deeper Fact Check on Vukmir Statement Would Have Found It Misleading

Jobs matter to voters. That much everyone can agree on.

After that, things get a little fuzzier.

The Milwaukee Journal Sentinel, in an effort to make things less fuzzy, has been running a series evaluating the accuracy of statements made by elected officials and political candidates. This week the Journal Sentinel relied on Wisconsin Budget Project materials among others to determine whether there was any validity to state Senate candidate Leah Vukmir’s claim that “For the first time in history, Wisconsin has more government jobs than manufacturing jobs.” Is that true? Our answer could be summed up as “Yes, but.”

Americans underestimate the wealth gap, but want far less disparity

The rich are getting richer, the poor are getting poorer, and the vast majority of Americans would prefer a much more level wealth distribution, along the lines of Sweden’s – according to an academic study that has been getting a little media attention this week.

A theme of our last two blog posts has been the new Census data revealing an unprecedented income gap between the rich and the poor. The distribution of wealth is even more lopsided than income, and – according to a new study – that gap is at odds with the much more balanced distribution of resources that most Americans favor.

Yet, even after the alarming statistics about the growing divide were released, conservative politicians have continued to argue for repeal of the estate tax and the extension of federal income tax cuts that contribute to the divide.  They continue to support the termination of progressive changes in refundable tax credits that can soften the gap a little bit, and conservative groups are calling for a regressive shift of state and local taxes by increasing sales taxes. (See yesterday’s post.)

Should Wisconsin keep striving to have a progressive tax system? WPRI and the Wisconsin Way suggest regressivity is the route to prosperity.

New figures on income released last week by the U.S. Census Bureau reveal an unprecedented level of income equality. This week as we were still digesting that news, the Wisconsin Way initiative unveiled a new draft of its “Wisconsin Prosperity Strategy,” which includes a recommendation that would widen the gap between the rich and the poor even more. Their plan proposes reducing income and property taxes and relying more heavily on sales taxes and user fees, thereby making our tax system more regressive.

An op-ed column that I wrote for last Sunday’s Milwaukee Journal Sentinel argues against shifting a larger share of Wisconsin’s state and local taxes onto low-income taxpayers, and the new data we reported on yesterday – regarding where millionaires live – also undercuts a central premise of the conservative argument for easing taxes on the wealthy.

Millionaires Prefer High Tax States

Conservatives frequently argue that taxes drive wealthy people – who they refer to as the job creators or job deciders  – to states with lower and less progressive taxes. That is part of the rationale for a recommendation made by the conservative Wisconsin Policy Research Institute that Wisconsin should “reform” its mix of state and local taxes so we rely more heavily on sales taxes and user fees, thereby making our tax system more regressive. (And as we will discuss in our next post, that recommendation has been included in the latest draft of a "Wisconsin Prosperity Strategy" unveiled Tuesday by the Wisconsin Way.)

Those anti-tax arguments are undermined by new data on where millionaires live, which indicates that they actually prefer high tax states.

Unhappy fiscal New Year begins for TANF-subsidized jobs programs

This is New Year’s Day for the federal fiscal year, and it’s a very unhappy start for many jobs programs across the country, which have created thousands of subsidized jobs to help low-income parents and displaced workers transition back into the private sector workplace.

Despite the efforts of Democrats to extend it, federal funding runs out today for the TANF Emergency Contingency Fund (ECF), which was a $5 billion appropriation in the Recovery Act that has been used in a variety of ways to help low-income families. One very important use of the ECF dollars has been to finance transitional jobs and summer youth employment programs, which have provided 235,000 jobs in 36 states for low-income parents and young adults.