The state of Wisconsin has a problem. Thanks to the manufacturing renaissance, economic boom, and record employment fostered by the Republican policies of the previous eight years, tax revenue has been cascading into Madison at record levels. According to the Legislative Fiscal Bureau, this will leave an estimated budget surplus of over $600 million in state government coffers at the end of the current fiscal year.
In a perfect world, the government would do one, or both, of two things with a budget surplus. They would either give the money back to the taxpayers who paid it or pay down some of the state’s outstanding debt. What they should never do is use surplus money as an excuse to spend more.
It is worth pausing for a moment to consider what surplus tax revenue really is. Every tax dollar that is taken from a citizen by the government is a dollar that cannot be used by that citizen for anything else. It cannot be used to pay for the citizen’s food, child care, health care, education, clothing, or housing. It also cannot be used to start a business, support a charity, or saved for retirement. Politicians should treat each tax dollar as sacred because every dollar represents an opportunity seized from a citizen with the coercive power of government.
The Republicans in the Legislature are on the right track with their handling of the surplus. The Republicans are working to pass a middle-class tax cut that would simply give the tax surplus back to the taxpayers by increasing the standard deduction for the income tax for families who earn up to $155,000 and individuals who earn up to $127,000.
It is not a perfect plan because it does not refund the surplus to all of the taxpayers who actually paid the tax. By excluding higher income Wisconsinites from the tax cut, the Republicans’ bill still panders to the vanity of politicians seeking reelection by redistributing tax dollars to a favored subset of the populace — in this case, the middle-class taxpayers. But the Republican tax cut is still elegant in its simplicity and clarity of purpose. It is also far superior to the governor’s plan.
Gov. Tony Evers opposes the Republicans’ plan and has proposed a tax increase in its stead. While the state’s coffers are overflowing with the hard-earned money of Wisconsin’s taxpayers, Governor Evers is proposing a redistributionist scheme whereby he would increase taxes to pay for more welfare and a more restricted income tax cut.
In Evers’ plan, he would jack up taxes on Wisconsin’s manufacturers by capping the manufacturers’ tax credit. Then he would use that money to expand Wisconsin’s Earned Income Tax Credit, which redistributes tax dollars to many people who did not pay income taxes, and provide a modest graduated income tax cut to families who earn less than $150,000 or individuals who earn less than $100,000.
Evers’ plan still leaves about $375 million unfunded, which means it would have to come out of the state budget. Given that Evers has announced plans to support spending increases in every major area of state government, one would presume that he would have to find another tax to increase to pay for the $375 million.
Noticeably, Governor Evers does not factor the surplus into his plan at all. His plan is a straight redistributionist scheme that raises taxes on one group of Wisconsinites to give it to another group of Wisconsinites. Presumably, Evers wants to just spend the surplus on some other spending boondoggle. In other words, Evers has made it clear that he wants to spend every extra dollar sent to Madison and then hike taxes even further to spend more. Fortunately, Wisconsin’s voters elected a Republican Legislature to check Evers’ tax and- spending ways.
The Republicans in the Legislature should pass their middle-class tax cut and surplus refund and put it on Evers’ desk to sign forthwith. Then the taxpayers will see whether our new governor prioritizes his tax and spending increases over refunding the tax surplus to middle class Wisconsinites.
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