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9/19/2008
Prestegard: On WI economic news
At the risk of state Sen. Bob Jauch’s calling me an enemy of the state for bringing this up, the latest Wisconsin economic news isn’t very good.
The U.S. Department of Commerce Bureau of Economic Analysis reports that in the second quarter of this year, Wisconsin’s personal income was 6 percent less than the national average, and personal income growth of 1.4 percent ranked 40th among U.S. states. (You can see the comparisons for yourself here.)
Jauch and others are unable or unwilling to make the connection to the state’s consistently low business climate rankings, so I will: It is neither an accident nor a surprise that five separately and differently compiled business climate rankings rank Wisconsin no better than 37th, and that personal income and personal income growth are both below national averages. When you have high corporate income and personal income taxes, businesses aren’t particularly inclined to move to Wisconsin (note the number of corporate headquarters that have moved out of Wisconsin), and the businesses that are here are handicapped by Madison (not just in taxes, but in regulations too) from being more profitable.
Our red-ink-covered state government finances are also not a coincidence. People who make more money send more money to the government in tax payments; they also buy more things, which also sends more money to the government in sales taxes, and they tend to buy and live in higher-priced homes, which also sends more money to the government in property taxes. This country’s experience with tax cuts going back to John F. Kennedy’s income tax cuts demonstrates that tax revenues increase as tax rates decrease. (That’s the first half of the balanced budget formula; the second half is to cut current spending and control future spending.)
Almost no Wisconsin Democrats, and not enough Wisconsin Republicans, seem to grasp this. The latter helps explain the current state of the state GOP.
Originally published on the Marketplace of Ideas Blog.
Steve Prestegard is the editor of Marketplace, Northeast Wisconsin’s business magazine.
COMMENTS
I have a friend who will be moving to another state, where her husband can get $5/hr more, properties cost half of what they do here, and property taxes are 1/7th what they are here. Until the people of WI wake up and realize they need to SHRINK THE GOVT--i.e, CUT govt programs, there will continue to be discrepancies like this.
emily matthews (Fri Sep 19 08:48:12 2008)
Exactly Emily! Unless and until we find some way to keep the giant financially liberal ulcer in the center of our conservative state from electing our government we'll continue to siphon-off tax funds for new and better social programs and entitlements.
The reason our nation's Founders didn't want the District of Columbia - the place where all the government employees lived and worked - having representation in government was because they could vote themselves benefits our country couldn't afford. In Wisconsin we allow not only the state bureaucrats to vote for representatives in government that will feather their nests, we also allow students from many other states to elect our Wisconsin government. Enter uber liberals like "Diamond Jim" Doyle and his staff of socialisic sorcerer's apprentices.
Adding insult to injury, most of those socially and fiscally irresponsible students, after saddling Wisconsinites with liberal spendthrifts, move on to the same other state as your friend where they can earn $5 per hour more at work, and where their property taxes are 1/7th (or less) of ours here in Wisconsin.
We could discuss Milwaukee too, but we'll save them for some other day.
Duke (Fri Sep 19 09:23:10 2008)
Oh brother, where do I start on this one (?)
How about this: let's have no taxes at all. Instead of trying to steal more money out of education and services for the disadvantaged, let's just have no taxes at all and be done with it. The whining would end once and for all.
No garbage pickup, no snow removal, no fire department, no road maintenance-- nothing. Then you can sit in your McMansion and wait for the snow to fall or whatever you think is going to happen in the ideal world of no government and private everything.
Here's the reality without getting into the social responsibility angle at all: Business is responsible for it's own profit through competition not taxes reduction on the employees (workers) of these businesses. How about capital improvements? I've been in any number of jobs where the owner would do nothing until absolutely necessary to improve anything at the site. Or maybe improve just those things necessary to comply with *the letter* of the law.
Statistics about the lack of increase in income and wages has more to do with the service economy of catering to tourists rather than making things. Doing each others laundry is not a healthy economy (unless perhaps you own the washing machine.)
Then there's the local self reliance angle wherein local businesses are rewarded and enterprises which have their headquarters in Arkansas do not get any subsidies for setting up shop here and moving at the drop of a hat or bad quarter of earnings.
If more dollars stay in the area through local multipliers (dollars being re-spent within the community) and supply chains rely on local suppliers of materials then wealth would increase from the ground up rather than for cut and run managers and owners.
Lon Ponschock (Fri Sep 19 10:10:09 2008)
I don't think you should have started at all. We don't need "no government," we just need much less government.
There was a time when government was the answer to some of our problems. In today's world, to an increasing extent, government IS the problem.
Duke (Sun Sep 21 22:53:05 2008)
Emily, what state are you referring to with higher wages, lower property cost, and one-seventh the property tax? Sounds a little too good to be true to me.
gymdawg (Fri Sep 26 12:52:59 2008)
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