Wisconsin is No 'Tax Hell,' Report Says
The image of Wisconsin as a "tax hell" is
a hoax cultivated by conservatives to generate support for placing strict
limits on government resources, a new report says.
The report by the Institute for Wisconsin's Future
– "Exposing the Wisconsin 'Tax Hell' Hoax: Why spending caps
on state and local government are wrong for Wisconsin" – says
supporters of spending freezes have exaggerated the level of government
spending in Wisconsin. Among other things, the report points out that:
- Wisconsin spending and taxes are actually closer to the middle than
the top, ranking only 18th highest in the nation.
- Wisconsin is at the median level of spending among its neighboring
states.
- Wisconsin spending has moved steadily downward in relation to the
national average. - Taxes now take a smaller bite of total income than in the 1980s
or 1990s.
- Wisconsin’s top income tax rate is the lowest it has been since
1931.
The report noted that much of the increase in homeowners' property
taxes are not the result of government spending increases but of laws
that have shifted the property tax burden away from businesses and onto
homeowners.
A series of tax exemptions over the last 30 years has significantly
cut business property taxes, which in turn has increased the taxes paid
by homeowners. Homeowners accounted for less than 50% of total property
taxes paid in 1970, compared to nearly 70% today.
"The business community is well aware that corporate taxes are
low," the report states. It offers this quote from the Web site
of Forward Wisconsin, the state’s business-to-business recruitment
agency:
"Wisconsin ranks fourth-lowest in the nation in business taxes
as a percent of all state and local taxes. The state's business-friendly
attitude is reflected in positive business tax changes that have been
made in every biennial legislative session since the early 1970s.”
The IWF says the obvious result is that the tax burden "is shifted
increasingly onto individuals," while the business community ironically
claims that high taxes on individuals are anti-business.
The report also details problems that have afflicted
Colorado since it passed the so-called Taxpayer Bill of Rights (TABOR)
a decade ago, placing severe restrictions on the ability of state and
local governments to raise resources. It said:
- Colorado’s general fund revenues fell 17% from 2001 to 2003,
compared to the national average of about 4%, due to the manner in
which TABOR restricts revenue increases.
- By 2003, Colorado reported the nation's second largest budget shortfall
relative to its budget.
- By 2000, Colorado had fallen to 50th in K-12 spending per pupil
in relation to state income.
- Colorado ranks 47th in state tax support for higher education.
- Since June 2002, state funding for libraries has been cut by 79%,
resulting in decreased access to information.
- TABOR has complicated Colorado’s fiscal life so much that
some of its original supporters have soured on it. “In hindsight,
I wouldn’t vote for it again,” said Republican State Senator
Ron Teck.
Conservatives are pushing for passage of a TABOR
amendment to Wisconsin's Constitution, a move that some predict would
result in massive cutbacks in the quantity and quality of government
services, including education.
The IWF report says a recent study by the Wisconsin
Policy Research Institute exaggerates the level of spending and taxes
in Wisconsin, minimizes the potentially destructive effects of revenue
and spending limits, and ignores a number of alternatives for strengthening
the Wisconsin economy.
The Institute for Wisconsin's Future is a Milwaukee-based
non-profit organization. Its focus is research, education, and advocacy
in areas of state public policy.
The entire
report (this link opens a pdf file)
Institute for Wisconsin's
Future Web site
OnWEAC Resource Page on School
Funding
Posted December 9, 2004