April 2017 Brief: Volume 24, Number 12
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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. 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.
Brett Healy, President of the MacIver Institute, wrote, “Wisconsinites have witnessed a nearly $5 billion total reduction in taxes since Governor Walker took office . . . .” As Healy wrote:
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.” By early 2014, the budget surplus had reached almost $1 billion, unemployment had fallen to 5.8 percent, and job growth was increasing. For Governor Walker, tax reform is a priority. His goal is to “lower the tax burden every year of his term.”
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.” 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.” Analysis by the MacIver Institute demonstrates that Governor Walker’s property-tax reform is significant and that it delivers the promised results:
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.” 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.” Wisconsin now has four income-tax brackets, with the lowest at 4 percent and the highest at 7.65 percent. Previously, there were five brackets with the lowest at 4.6 percent and the highest at 7.75 percent. Overall, Governor Walker has made significant progress in income-tax reform:
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. 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. 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.”
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.
John Hendrickson is a Research Analyst with Public Interest Institute, Muscatine, Iowa. Contact him at Public.Interest.Institute@LimitedGovernment.org.
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