Have we finally gotten to the point where the lines on the graph cross? Is it possible that politicians in Wisconsin have increased taxes and fees to the point that state revenue collection suffers?
There are ample examples of tax rate cuts actually increasing the amount of taxes collected. It happens at the federal level and at the state level. There are also many examples of the reverse. Governor Doyle will probably not address this during his 'State of the State' message on Wednesday of this week. He'll talk about the the economic slowdown and the need for belt-tightening at the state level.
Will he talk about his plan to permanently reduce taxes? Will he acknowledge that we've finally found the point beyond which we get no return on tax rate increases? Will he talk about our state's propensity to spend more than it should? Will he discuss the revenue shortfall (called structural deficits in the amount of nearly $1 Billion) built into the current budget to make it appear to be balanced? Will he discuss how the future of Wisconsin has been mortgaged many times over?
Short answer: doubtful.
He'll talk about belt tightening. He'll talk about 'targeted tax breaks'. He'll be looking for silver bullets to solve the slowdown. There'll be enough blame heaped on the federal government, not that it doesn't deserve that blame.
We are a high-tax state and high-tax states are particularly vulnerable in economic slowdowns. Economic slowdowns occur and when the last budget with its 6% increase in state spending was passed, that was not thought about. We wonder why we can't hold on to our corporate headquarters and businesses, and we wonder why we can't attract more jobs to the state.
Short answer: our taxes are too high.
