Happy (?) Cost of Government Day

Today is Cost of Government Day in Wisconsin, the government spending side of Tax Freedom Day, when the overburdened Wisconsin taxpayer is finally done paying for federal, state and local government spending.

Wisconsin ranks 41st; put another way, Wisconsin has the 10th latest Cost of Government Day, which means only nine states have more federal, state and local spending. Two of those are our neighbors, Illinois and Minnesota.

You’ll notice that Tax Freedom Day is three months and two days before Cost of Government Day, which demonstrates the grotesquely out-of-balance federal budget, despite the fact that one-fourth of our gross domestic product is sucked into the federal rathole.

And for what, you ask? Excellent question:

This graphic shows the increase in federal employment from 2010 to 2011. Two of these agencies listed here, the Education and Homeland Security departments, should be abolished because neither education nor homeland security has improved since those departments were established.

As for Wisconsin …

… notice that this state is in the top 25 percent of states in terms of state and local government employees. Since employee compensation is the top expense of any unit of government below the state (and second highest behind shared revenue in the case of the state), the more government employees you have, the more spending you have.

It should be obvious as well that the more units of government you have, the more government spending you have. Wisconsin has 3,120 units of government, second per capita only to Illinois, a state no one should want to emulate.

This is despite the praise the report gives Gov. Scott Walker:

In 2010, Wisconsin Governor Scott Walker aimed to close a $3.6 billion state budget deficit by confronting the unsustainable liabilities in the state’s pension and benefits system. His proposals ended collective bargaining for most state employee union members and offered paycheck protection to workers. …

A recent study conducted by the Beacon Hill Institute looked at the effectiveness of the Wisconsin reforms. It found the measures prevented “painful tax increases that would have damaged the state’s private economy.” The study also showed that over 6500 public sector jobs, and somewhere between 11,500 and 14,000 private sector jobs, have been spared due to the proposal’s cost-savings.

Finally, the Walker budget saved Wisconsin taxpayers over $1 billion during its first year. In terms of COGD, this amounts to 1.37 days of work in the Badger State. Coupled with other reforms, Wisconsin has gone from an almost $4 billion deficit to a surplus in two years, without raising taxes. Governor Walker’s efforts should be used as a model for other states in order to reduce spending and tackle the unaffordable liabilities of bloated public worker pay and benefits.

Yeah, well, notice that Wisconsin, despite having about 2 percent of the country’s population (which is in about the middle), still is in the top 10 for government spending. The Walker reforms remain in the necessary-but-not-sufficient category.

In other words, Wisconsin remains a tax, spending and regulatory hell. And the effect of that is shown on this map:

Making use of date from the Internal Revenue Service (IRS), we calculated both the number of taxpayers migrating and the adjusted gross income (AGI) that left the state. That is, we have calculated how much money—in terms of personal income—states lose or gain due to the migration of taxpayers. Our findings confirm previous studies, in which taxpayers leave states with high taxes, unfunded pensions and healthcare liabilities.

Due to the ease of interstate migration, taxpayers can easily avoid higher taxes by moving to another state. Consequentially, there is a significant effect wherein a rise in tax rates can lead to lower government revenues as individuals flee. There are nine states with no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. In 2010 alone, these states gained a net total of over 134,000 new residents; additionally, these migrants brought with them over $6.7 billion of net adjusted income, according to IRS data.

In contrast, the ten states with the highest tax burden: California, Connecticut, Maine, Minnesota, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Wisconsin lost around 200,921 residents and $7.4 billion of net adjusted income in 2009 alone.

From 2001 to 2010, the ten states with the highest tax burden lost over 2.5 million residents. These residents took with them a staggering $80.03 billion in adjusted income. …

The migration of residents from high to low-tax states has been the biggest issue facing state governments in over ten years. Without significant fiscal restraint as well as reforms in public employee pension and healthcare retirement programs, states with heavy tax and entitlement burdens will continue to see residents leave for lower-tax states, further draining state treasuries.

And people wonder why Wisconsin still sucks wind in personal income growth, business starts and other measures of personal vitality. If all the government we have had a positive effect on our quality of life, Wisconsin wouldn’t have lost all those people who left this state in search of more opportunity elsewhere.

At this point, someone usually asks, well, what government would you be willing to give up? To which I reply: The State Patrol, everyone with the title “executive assistant” in any state government agency (who are political appointees), most people with the title “communications officer” (or the equivalent) in every state government agency, a large chunk of the Department of Natural Resources (particularly the part that buys land to take it off the tax rolls), full-time state legislators, most staffers who work for state legislators, the (full-time) Milwaukee school board, mass transit in the state’s largest cities (Want mass transit? Pay for it yourself) and every cent of funding for political candidates. I may think of more later.

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