Site menu:

 

April 2017 Brief: Volume 24, Number 12

  Click Here for a pdf version.
 

Wisconsin in the Aftermath of Act 10

 

by John Hendrickson

 

 

Governor Scott Walker (R-WI) is leading the way in reforming his state and finding ways to not only grow the economy and create jobs, but to also lower the tax burden on the citizens of Wisconsin. When Governor Walker assumed office, Wisconsin faced a $3.6 billion budget deficit and high unemployment. To solve the budget crisis, Governor Walker decided to reform the state’s collective-bargaining law; these reforms became known as Act 10.[1] Act 10’s reforms saved Wisconsin taxpayers $5 billion and allowed Governor Walker and the Legislature to begin a series of tax reforms to grow the economy.[2]

 

Brett Healy, President of the MacIver Institute, wrote, “Wisconsinites have witnessed a nearly $5 billion total reduction in taxes since Governor Walker took office . . . .”[3] As Healy wrote:

 

Over the course of six years and three biennial budgets, a wide variety of changes to Wisconsin tax laws have generated a total taxpayer savings of $4.756 billion, the LFB [Legislative Fiscal Bureau] estimates. That includes 50 income and franchise tax changes totaling $3.018 billion in tax relief; 13 other general fund tax changes totaling $27.46 million; and 5 measures that target reducing property taxes, totaling $1.711 billion.[4]

 

In examining Act 10, it is difficult to downplay the impact it is having on Wisconsin. Governor Walker noted that in the aftermath of Act 10, “we [took] the $3.6 billion deficit we inherited and turned it into more than a half-billion-dollar surplus.”[5] By early 2014, the budget surplus had reached almost $1 billion, unemployment had fallen to 5.8 percent, and job growth was increasing.[6] For Governor Walker, tax reform is a priority. His goal is to “lower the tax burden every year of his term.”[7]

 

Once the budget deficit was eliminated, Governor Walker immediately began to focus on tax reform; the “first half of the surplus went to driving down property taxes.”[8] Governor Walker wrote that with “our Blueprint for Prosperity, the typical homeowner will see an actual reduction of more than $100 on his or her property tax bill.”[9] Analysis by the MacIver Institute demonstrates that Governor Walker’s property-tax reform is significant and that it delivers the promised results:

 

Today, property taxes are at the smallest percentage of personal income since 1945, 3.6 percent. The average homeowner in Wisconsin, in 2016, paid $116 less in property taxes than he or she paid in 2010.[10]

 

When Governor Walker signed the state budget in 2013, it included income-tax reform. This tax reform reduced the number of tax brackets and cut “rates for everyone who pays income taxes in the state, including those in the lowest income bracket.”[11] Based on information from the Wisconsin Department of Revenue, the MacIver Institute states that the “typical family in Wisconsin has seen their income taxes cut by $1,159.”[12] Wisconsin now has four income-tax brackets, with the lowest at 4 percent and the highest at 7.65 percent.[13] Previously, there were five brackets with the lowest at 4.6 percent and the highest at 7.75 percent.[14] Overall, Governor Walker has made significant progress in income-tax reform:

 

Governor Walker’s 2013-15 biennial budget included $650 million in individual income-tax relief and nearly $1 billion in tax relief overall for Wisconsin’s families and businesses, making it the largest income-tax cut in 14 years. The 2015-17 biennial budget reduced the marriage penalty, cutting income taxes for married couples by expanding the standard deduction by $550 for married joint-filers and $260 for married separate-filers.[15]

 

Governor Walker’s tax reforms are helping Wisconsin achieve economic growth. The state’s unemployment rate is down to 3.7 percent; in February, close to 8,000 jobs were added to the economy.[16] Governor Walker also noted that “more than 200,000 private-sector jobs have been created since December of 2010,” and most of these jobs are in manufacturing.[17] Governor Walker’s 2018 budget proposal continues his drive to lower taxes. If the Wisconsin Legislature enacts his budget, Governor Walker notes that “the cumulative impact of our tax cuts [will be] $8 billion.”[18]

 

In the aftermath of Act 10, Governor Walker has not only fulfilled his promises; he is working to grow the state’s economy through responsible tax reform. If the Legislature enacts his budget this year, Governor Walker will have reduced the tax burden on taxpayers every year in Wisconsin since he won the election in 2011. Governor Walker’s $5 billion in tax relief is a pro-growth achievement that needs to be celebrated.

 

Endnotes:
[1] For more information on Governor Walker’s Act 10 policy, read Public Interest Institute’s “The Wisconsin Miracle: Governor Scott Walker and the Historic Act 10 Reform Measure” by John Hendrickson, Policy Study, No. 17-3, February 2017, <http://www.limitedgovernment.org/publications/pubs/studies/ps-17-3.pdf> accessed on March 27, 2017.
[2] Nick Novak, “Act 10 saves Wisconsin taxpayers more than $5 billion over 5 years, MacIver analysis finds,” MacIver Institute, The Free Market Voice for Wisconsin, February 25, 2016, <http://www.maciverinstitute.com/2016/02/act-10-saves-wisconsin-taxpayers-more-than-5-billion-over-5-years-maciver-analysis-finds/> accessed on March 27, 2017.
[3] Brett Healy, “Estimates show nearly $5 billion in tax relief for Wisconsinites over past six years,” MacIver Institute, The Free Market Voice for Wisconsin, September 30, 2016, <http://www.maciverinstitute.com/research/2016/09/estimate-shows-nearly-5-billion-in-tax-relief-for-wisconsinites-over-past-six-years/> accessed on March 27, 2017.
[4] Ibid.
[5] Governor Scott Walker with Marc Thiessen, Unintimidated: A Governor’s Story and a Nation’s Challenge, Sentinel, New York, 2014, p. 251.
[6] Ibid.
[7] Ola Lisowski, “A Glide Path to a 3% Flat Income Tax: Comprehensive Tax Reform for a More Competitive Wisconsin,” MacIver Institute, The Free Market Voice for Wisconsin, January 2017, <http://www.maciverinstitute.com/Glide%20PathEXEC-FINAL.pdf> accessed on March 27, 2017.
[8] Walker and Thiessen, p. 252.
[9] Ibid.
[10] Lisowski.
[11] Walker and Thiessen, p. 252.
[12] Lisowski.
[13] Ibid.
[14] Lisowski.
[15] Governor Scott Walker, “Governor Scott Walker Travels Throughout Wisconsin to Highlight $4.7 Billion in Tax Relief,” Office of Governor Scott Walker, April 18, 2016, <https://walker.wi.gov/press-releases/governor-scott-walker-travels-throughout-wisconsin-highlight-47-billion-tax-relief> accessed on March 27, 2017.
[16] Governor Scott Walker, “Weekly Radio Address: Wisconsin’s Economy in the Best Shape Since 2000,” Office of Governor Scott Walker, March 23, 2017, <https://walker.wi.gov/press-releases/weekly-radio-address-wisconsins-economy-best-shape-2000> accessed on March 27, 2017.
[17] Ibid.
[18] Governor Scott Walker, “Weekly Radio Address: Keeping Our Tax Relief Promise,” Office of Governor Scott Walker, February 23, 2017, <https://walker.wi.gov/press-releases/weekly-radio-address-keeping-our-tax-relief-promise> accessed on March 27, 2017.

 

John Hendrickson is a Research Analyst with Public Interest Institute, Muscatine, Iowa. Contact him at Public.Interest.Institute@LimitedGovernment.org.

 

Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used:"Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute." The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.

   

 

 

All of our publications are available for sponsorship.  Sponsoring a publication is an excellent way for you to show your support of our efforts to defend liberty and define the proper role of government.  For more information, please contact Public Interest Institute at Public.Interest.Institute@LimitedGovernment.org