Walker’s Discriminatory Taxes

I have a hard enough time tracking Colorado politics; I spend very little time tracking the politics of other state. However, Wisconsin Governor Scott Walker has become the subject of national controversy because of his proposal to limit collective bargaining of political-sector unions.

At the pro-union rally in Denver February 22, I heard from a number of people who claimed that Walker’s tax cuts are responsible for the budget crisis there. Clearly that’s false: Walker’s tax cuts amount to something over $100 million, while the state faces a multi-year budget crunch of over three billion.

But this does raise the question of whether the tax cuts were a good idea. I see two problems with them.

First, as Russ Randall effectively argues in a new video, what matters is government spending, not tax rates. To me, putting the cart of tax cuts before the spending horse makes little sense.

If there is spending in the Wisconsin budget that should be cut — and I do not doubt that there is — then the straightforward thing to do is advocate those cuts.

I hasten to add that long-term tax restraints, such as Colorado’s Taxpayer’s Bill of Rights, serve to restrain year-to-year spending increases, so they address the spending side.

The larger problem with Walker’s tax cuts is that they are discriminatory. In general, it’s wrong to tax substantially similar parties different tax rates. Taxes should be applied evenly across the board. Indeed, it seems obvious to me that discriminatory taxes violate the “equal protection” guarantees of our Constitution. That said, eliminating discriminatory taxes should not become an excuse to raise net taxes; instead, the discriminatory taxes should be phased out in a revenue-neutral way (or in a way that reduces overall spending), to relieve the burden of other taxpayers. I’d rather see a discriminatory tax remain in place than see it eliminated in favor of increased spending (which is the strategy of Colorado Democrats).

The AP reports that Walker’s proposals offer tax cuts for “new” jobs — which means that existing jobs will be taxed more heavily. It’s wrong to political favor “new” jobs over established ones.

The Post Crescent reports that another of Walker’s proposals offers tax breaks to companies that relocate to Wisconsin. That punishes existing companies more heavily. If I were an established Wisconsin company, I’d be a little pissed that Walker gave tax advantages to my relocated competitors.

Politicians should not use tax policy to favor some companies and jobs over others. Taxes should be low and evenly applied. Discriminatory taxes should be phased out, not expanded, in a way that benefits the rest of the taxpayers. Walker should have promoted general tax cuts, along with the spending cuts required to balance the budget.

All that said, from what I can tell overall Walker has the interests of taxpayers in mind, which is a lot more than can be said for his many leftist critics, who generally argue as though a citizen’s money automatically belongs to the government for politicians to “redistribute” at will.


Ari commented February 28, 2011 at 2:23 PM
I unintentionally deleted the following message from Paige. My quick response is that spending on government employees is paid by other working people. -Ari

Ari – If Gov. Walker has the interests of any tax payers in mind then it is that of businesses. He had cut taxes for companies and corporations not the working people. In fact, he wants the working people to take pay cuts in order to make up for the tax cuts he made.

Yes, you have heard several pro union people state that Gov. Walkers tax cuts are the reason for their deficit. The multi-billion dollar deficit you speak of is a PROJECTED deficit, the actual numbers right now reflect a deficit of only 138 million, which means that the 140 million dollars of tax cuts Walker approved definitely have something to do with the short falls.

The bottom line here is that he made those cuts, and the state of Wisconsin is facing a budget crisis HOWEVER the answer to this is not to force public employees, some of the hardest working people in the nation, to take cuts to their pay, health plans and pensions. Gov. Walker has said numerous times that this is the only way to fix the deficit.

If this is true that why doesn’t Gov. Walker conceed with the people. Public employees already agreed to take the cuts, they only want to keep their right to collectively bargain, which is a right given to every working person who cares to fight for it.

If Gov. Walker was concerned about the deficit as he says he is then he would have been happy to remove the collective bargaining piece of the bill.