This week the Wisconsin Way coalition released a report called Blueprint for Change which outlines recommendations for change in three areas: economic development, tax reform, and government spending/management. Members of the coalition are quite diverse and include the Wisconsin Education Association Council, the Realtors Association, and the Wisconsin Counties Association. The group has been working for over a year, holding forums across the state and engaging folks in a "public conversation about modernizing and refining taxes and government." Wisconsin is one of many states facing a budget shortfall so efforts to engage the public on important fiscal issues are certainly laudable, but many of the specific proposals discussed in the report make us question whether or not the coalition and members of the public understand basic tax principles.
For example, one of the strategic initiatives on tax reform is to "enhance fairness and progressivity in the levying and collection of taxes," but later in the report "increasing reliance on income sensitive revenue sources like sales and consumption taxes" is suggested. Ironically, it is exactly because sales taxes aren't income sensitive that they are such a regressive funding option. Increasing the state's reliance on sales tax is no way to increase the fairness and progressivity of Wisconsin's tax structure.
Another contradiction in the report appears in the discussion about business development and job growth. The group purports to want to "enhance the ability of Wisconsin's tax structure to stimulate business development and expansion and job growth," but one of the action options they propose is to eliminate the state's corporate income tax. But there is solid evidence that state corporate taxes often aren't that important when companies are making decisions about where to locate.
We're puzzled by the Wisconsin Way report and wonder if a basic review of tax policy principles might be helpful for coalition members, who are welcome to look at a helpful ITEP policy brief on the issue. Despite the alleged input from 6,000 Wisconsinites, the Wisconsin Way so far seems to be exactly what Senate Majority Leader Russ Decker calls a "recipe for disaster for Wisconsin taxpayers."