Economy & Budget

Gov. Walker pledges income tax cut for Wisconsin

Gov. Walker pledges income tax cut for Wisconsin

First Virginia Gov. Bob McDonnell proposes the elimination of the state gas tax, then Louisiana Gov. Bobby Jindal calls for wiping out all state income and corporate taxes.  Now Governor Scott Walker of Wisconsin is talking about reducing income taxes in his state, as reported by the Milwaukee Journal Sentinel:

Gov. Scott Walker pledged Thursday to cut income taxes in the state budget he signs this summer, calling it the best way to spark the economy. But he also said the reduction would be phased in over a number of years.

For us, one of the biggest bangs for our buck is dropping the individual income tax rate, putting more money back in the hands of consumers and small business owners out there so that they in turn can invest that money, they can take out loans, they can move forward and put people to work. We’re committed to doing that,” the Republican governor told the Wisconsin Bankers Association at the group’s annual Economic Forecast Luncheon in Madison.

Walker has said in recent weeks he wanted to cut income taxes, cut property taxes or do some of both, depending on what would be most effective. In his Thursday speech and in a news conference afterward, he said he saw an income-tax cut as the best way to boost the economy.

He said he would not cut property taxes but would limit their growth, signaling the limits would be the same or similar to the ones he put in place shortly after coming into office in 2011.

Walker didn’t discuss how much of an income-tax cut he was talking about, other than to say it would be “significant” and would be put in place over a number of years. That means some of the tax cuts wouldn’t take effect until 2016 or later – after the next budget ends in mid-2015.

(Emphasis mine.)  But… but… the national Democrat Party keeps saying the best economic stimulus is welfare benefits, and higher taxes don’t have any effect on business growth!  It looks like Walker will help us put it to the test.  Again.  Don’t worry, the people who learned nothing from the previous thousand tests won’t learn anything from this one, either.

The fiscal space for Walker to discuss these growth-oriented tax cuts was created by his successful elimination of Wisconsin’s “structural deficits,” which the Journal Sentinel describes as “the imbalance between expected revenues and expected expenses.”  In other words, deficits baked right into the cake – the state budgets actually anticipated failing to have enough income to cover expenses.  Say, that sounds just like the big honking deficit in Washington!  Except they don’t have “budgets” at all.

Walker promised a “pay as you go” approach to his tax cuts, cautiously ensuring that his plans won’t “put us in a deficit position like we inherited.”  Hey… that sounds familiar, too!  I could swear a bunch of people in Washington were boasting about their fabulous “pay-go” approach to deficit control just a few years ago.  Every new spending proposal would be immediately paid for by cuts in other spending.  What did those folks call their group again?  Oh, right: “Democrats.”  Funny how they never talk about “pay-go” anymore, isn’t it?  Maybe they’ll perk up again, after Walker shows them how it’s done.

It will be interesting to see if these Republican governors are able to take the lead on tax reform, with results that restore the national party’s confidence in its growth agenda.  Such an infusion of confidence is sorely needed.

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