I have known Joe Wineke as a particularly odious Democrat, a former state senator and head of the Wisconsin Democratic Party. During a political issue in which Wineke was on the wrong side, someone commented that “Wineke” was pronounced “WHINE-icky.”
Then I heard from Wineke’s successor as head of the state Democratic Party, and Wineke sounded statesman-like in comparison.
I’m not sure what happened to Wineke, because based on what he wrote for the Wisconsin Policy Research Institute, he’s starting to make sense:
By any definition, Wisconsin is in economic trouble. Recent reports rate the state 44th in job creation and, according to CNBC, 46th in the quality of our workforce. Even worse, for the past 30 years, we have ranked 48th in personal income growth. We are not creating enough jobs, our workforce is not diverse enough and our income lags well behind the rest of the country. If something does not change and change soon, Wisconsin could be last in the nation in job creation.
It is imperative that we change the way we do business. We need to think big and de-politicize the process while doing so.
State government likes to talk about job creation, but consistently thinks small. Both political parties waste time blaming each other. Republicans think we can fix everything by cutting taxes and weakening the regulatory climate. Democrats play the “soak the rich” card at any available opportunity and often reject anything that smacks of business help. Neither plan does much to create well-paying jobs.
Wisconsin should look at four areas that will create greater economic opportunity for our state. We need to:
Make major investments in business capital.
Change our tax code.
Fix our transportation system.
Provide major investments in education.
The detail of Wineke’s bullet points:
Start with business capital. It is no secret that businesses (especially small and start-up business) are having a very difficult time getting private-sector funding. Recently, the Wisconsin Alumni Research Foundation and the State of Wisconsin Investment Board came up with a plan to provide up to $30 million in investment capital. A good start, but the amount of funding is so small that it will only help on the edges. Wisconsin needs to create a large business and venture capital fund, place it out of the hands of politicians and fund the program through bonding.
This is at least worth pursuing, although how you “place it out of the hands of politicians” is an excellent question. (In fact, Wineke’s desire to “depoliticize the process” seems naïve, though well-intentioned.) There’s also a policy question of whether you really want government involved in financing business, although that is already the case with such organizations as the U.S. Small Business Administration.
Second, we need to look at taxes. Wisconsin should follow the four basic principles of sound tax policy: simplicity, transparency, economic neutrality and stability. Start by eliminating the tax on tangible personal property. It is poorly administered, is complex, treats businesses worse than other property owners and is very unstable. Currently this tax raises around $260 million per year and is entirely placed on the business community.
We should also rewrite our sales tax code. We currently exempt more from the sales tax than we collect, creating unfair disparities. For example, internet sales are tax exempt in Wisconsin. Customers on Main Street pay. It is grossly unfair and puts our merchants at a disadvantage. But, once again it will require our elected officials to think outside the box.
There are points to be made on both sides of the Internet sales tax, but revising the sales tax while keeping the revisions revenue-neutral is worth considering. Tax revenues should increase because of increasing economic activity, not because of increasing taxes. As long as Wineke correctly wants to get rid of the personal property tax, he should also favor dumping the corporate income tax, which, like the personal property tax, is not paid by businesses, but is paid by businesses’ customers.
Wineke’s focus on taxes ignores the fact that, while taxes are the most important component of a good, or bad, business climate, it’s not the only component. I’d love to see a Democrat take on the job-killers at the Department of Natural Resources and the other regulatory agencies that make doing business a struggle in this state.
Wisconsin business moves by highways. It costs millions of dollars to replace or add a mile of road. Our transportation funding system is a relic from 50 years ago. It is dominated by a large gas tax and a registration fee that is regressive. The United States has reduced oil consumption by nearly 15% in the past two years, reducing available tax revenue. This trend will continue. We must have the courage to find new ways to fund transportation. The most logical way is to create an assessment on vehicle miles traveled (VMT). A VMT assessment is fair.
Here’s where our paths diverge. My preferred way to fund transportation is to fund vehicular transportation, and not mass transit, bike paths or the other non-vehicular forms of transportation that suck money out of the transportation fund while having nothing to do with moving state businesses’ products from plant to seller. Apparently Wineke is OK with the state’s knowing how much you drive; I am not.
Fourth, we need to get back to funding education properly. In recent years, education has become a “whipping post” for too many. Instead of cutting income taxes by two dollars a week, put that money into K-12 education, technical colleges and our University System. We also need to refocus our technical colleges away from being the portal to enter four-year campuses and get them back to teaching job skills.
When you consider that the number one area of state spending is on education, it’s unclear what “funding education properly” is, or what the result of “funding education properly is.” This state’s schools are, bluntly, overrated, despite the fact that few states’ taxpayers have been burdened by the taxes Wisconsinites pay for our supposedly great schools. Schools need to earn more money by doing better, not merely given what the education establishment defines as “funding education properly.”
The other thing about school funding is that there remains no evidence that school quality leads to economic growth on the macro (that is, statewide) level. As I’ve pointed out before, when a person’s education improves, that person’s economic opportunity improves, including leaving Wisconsin for greener pastures. We’ve had better schools than most other states for the entire 30 years our state has ranked 48th in personal income growth.
I disagree with a lot of what Wineke wrote, but I give him credit for not singing out of the Democratic songbook. (Using a bible metaphor seems oxymoronic.) The state’s business climate should be a nonpartisan issue. If you’re going to create more jobs, you have to improve the business climate, since, even in this overgoverned state, business still employs the majority of employed Wisconsinites.
Assuming that jobs are an issue in the 2014 elections, Wisconsinites should welcome Democratic candidates who come up with a superior approach to the approach of the late 2000s Legislature, which, under Democratic control, took a poor business climate and made it worse. Democratic gubernatorial candidate Tom Barrett didn’t come up with a better approach, which is why he remains the mayor of Milwaukee and why Democrats are the minority party in the Legislature.
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