News & Articles
Browse all content by date.
Wisconsin has a new biennium budget. After all the controversy and political posturing Governor Walker signed the budget into law in July. The $72.7 budget is allegedly balanced and claims not to raise taxes. But does it solve our budget problems? Or, like prior Republican and Democratic administrations, does it push the real problems off to the future?
Government is an essential part of our economy and society. It is the necessary rule maker and referee. It is a major consumer, employer, and provider of services. The public infrastructure provided by all levels of government is the foundation of our economy. State government is the primary provider of education and training.
But does the budget adequately fund the government we need? A budget must set necessary priorities and raise sufficient revenue to accomplish our needs. It is not just about cutting taxes. Government must have sufficient revenue to do its job.
We go through these debates every two years about what to cut. We don’t discuss real, long term solutions to the state’s fiscal problems. I suspect that two years from now we will find that Governor Walker’s rosy scenarios did not come true and there is another deficit “crisis.”
What are the long term solutions? I would suggest the following.
Collect unpaid taxes from the deadbeats!
Wisconsin loses an estimated $1.6 billion every year in uncollected taxes. The tax gap is defined as the difference between the amount of money that taxpayers should pay and the amount that is actually paid voluntarily and on time. This $1.6 billion gross tax gap includes: the individual income tax ($746 million), sales tax ($536 million), corporate income tax ($113 million), cigarette tax ($44 million), and underpayment of taxes ($164 million). Collections actions by the Department of Revenue recovered $401 million, leaving a net tax gap of $1.2 billion. Collecting taxes due is not an increase in taxes.
Collect taxes from the 60% of corporations operating in Wisconsin who pay NO income taxes.
These companies benefit from the roads, police, fire, and other public services. They should contribute. I think GE or Bank of America could afford to help out before we cut our schools.
Cut lower priority spending.
Any rational ranking of government services would place education toward the top. As an example, maybe we should cut the Department of Tourism before education. The tourist industry could probably do its own advertising.
Stop contracting out government services.
We pay more, for less service, when private, for-profit companies replace public employees in providing services. It is not true that the private sector can do it better or cheaper. Harper’s magazine sites studies that the federal government pays 87% more for contracted work.
Cut the counterproductive spending.
It is well known that preventive social services such as prenatal care, Head Start, and youth after school programs save money in the long run. It is better to provide education than to fill up prisons. Health care is cheaper than illness.
Control medical insurance costs.
Government in Wisconsin spends billions of dollars for public health care programs and employee health benefits. Controlling these costs and the extremely high cost of health insurance would provide large savings for the state budget.
Get real about business incentives.
There is little evidence that tax breaks for businesses create jobs or do anything for the economy other than reduce public revenues. If trickle down economics really worked, we would have had boom times since Ronald Reagan!
Cut the budget band-aids.
We need real, comprehensive, sustainable budget solutions. Governor Walker has not solved the budget problems. He has applied shortsighted band-aids by cutting public employees, schools, and other public services. After four years we still have large budget deficits.
Will we rationally prioritize our need for good government? Will we look at all the options and find real solutions? Or, will we continue with political posturing, ideological blinders, and budget band-aides?