Posted on 01/21/2003 10:24:08 AM PST by Indy Pendance
Increasing the income or sales tax as a way of solving the state's fiscal crisis will result in the loss of thousands of jobs, according to a study released today by the Wisconsin Policy Research Institute.
The Thiensville research group calculated that raising the sales tax enough to increase state revenue by $1.6 billion would cost 55,514 jobs. Increasing the income tax to raise $1.6 billion would erase 84,015 jobs from Wisconsin payrolls, the institute calculated. The state has about 3 million jobs.
The figures were arrived at by using the Wisconsin State Tax Analysis Modeling Program, developed by economists at the Beacon Hill Institute for Public Policy Research at Suffolk University in Boston.
The program used data from 2001 to link different economic relationships within Wisconsin. After it showed that it could accurately reflect what happened in 2001, the economists asked it what would happen if the sales tax were raised to 7.4% from 5% and personal income tax brackets were increased by about 2 percentage points.
The job losses of 55,514 and 84,015, respectively, were the answers provided by the program.
These tax increases were selected because they are the amounts needed to raise an additional $1.6 billion annually, said James H. Miller, institute president.
Miller explained that the tax study was undertaken in November, when $1.6 billion was the best estimate of the state budget shortfall for the next fiscal year, which begins July 1.
Since then, Gov. Jim Doyle has estimated that the shortfall will be closer to $2 billion. He also has pledged not to raise taxes to deal with the situation.
Miller said he did not know what the job impact would be if the sales or income taxes were used to raise $2 billion in extra revenue, because that is not the question asked of the Boston researchers.
The best guess would be to increase the job losses by about 20%, Miller said. The program provided answers "that are very close to linear," he said.
While the program shows an overall job loss if the sales or income taxes are raised, government employment increases under the scenarios, he said.
"This study clearly demonstrates that when you raise taxes, you kill jobs," said James Pugh, spokesman for Wisconsin Manufacturers & Commerce in Madison, the state's largest business trade group. "Higher taxes put private sector employees on the unemployment line while they put government employees on the gravy train."
In the report presenting the figures, the institute noted:
"The trade-offs for the state are difficult. If it chooses to increase the sales tax rather than cut spending, it will lose 55,000 jobs, discourage investment and make citizens worse-off financially.
"If the state instead chooses to close the gap with a 2 percentage point increase in personal income tax, the state loses even more jobs (84,000) and greater investment. Neither alternative is appealing. But at least one can now better know the costs of addressing the revenue shortfall through two alternative tax vehicles."
The report assumes that all the provisions and exemptions in the current state income and sales taxes remain.
"Theoretically, it makes sense to say that if taxes are increased, the economic impact is likely to be adverse," Todd Berry, president of the Madison-based Wisconsin Taxpayers Alliance, said in an e-mail Monday when asked about the report. He had not yet seen the report, he said.
"Quantifying that impact is a more challenging task, for the resulting forecast will rest on the economic assumptions made by those who built the economic model," Berry continued. "There will be differences of opinion among economists as to what they think the relative impact of tax changes are. This has been and will continue to be a topic for debate among the profession."
What? You mean like Democrat controlled and Depression Davis governed CA? Are you SERIOUS?
Google will turn up more, be sure to put in Colorado Taxpayors bill of rights.
That is most definitely not a problem. Most of those people dont pay attention to politics enough to understand the issues at hand so when they do vote they vote with emotion for the side with the best pr. Why do you think D's are always behind the "get out the vote" crap?
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