Recent figures from the non-partisian Tax Foundation prove what Wisconsinites have felt forever: they’re being taxed to the brink. The foundation found that:
Tax Freedom Day, the day when Wisconsinites have earned enough money to pay their total tax bill for the year, is on April 12. This ranks 13th nationally.
Wisconsins state and local tax burden is ranked 9th highest nationally and hasn’t been below the national average between 1977-2008.
Wisconsins individual income tax ranks 11th among states that levy the income tax.
Wisconsin property taxes are the 11th highest in the nation.
Wisconsins business climate ranked 40th according to the Tax Foundationss 2011 State Business Tax Climate Index.
These figures are startling and represent the urgency and importance of the proposed tax cuts being debated in special session.
The Left has criticized cutting taxes because of the budget deficit, but it’s a myth that budget deficits are solved by raising taxes. At the federal level, economists have found that from 1945-2009, every dollar of new tax revenue brought $1.17 of new spending.1 The states are no better. Milton Friedman summed up this point by saying politicians will always spend every penny of tax raised and whatever else they can get away with.
Despite what critics continue to say, lower tax rates do spur economic growth. President Kennedy understood this. President Reagan understood this. And even President Obama understands this, evidenced by his extension of the Bush tax rates last December. Economist Richard Vedder studied the economic performance of low tax states vs. high tax states between 1957-1997 and found that low tax states saw a dramatic rise in real personal income as well as greater population growth.2
Given that higher taxes never result in cutting deficits, and that lower taxes spur economic growth, tax cuts represent the best opportunity to improve the abysmal business climate in the state of Wisconsin.