The gas and income tax plan of state Rep. Dale Kooyenga (R–Brookfield) has at least two supporters.
First, UW–Milwaukee Prof, Jay Miller:
Let’s start with a simple proposition. The purpose of taxation is to raise revenue for government to function. Period. Yet legislators continually distort this proposition by using the tax laws to reward or penalize all sorts of behavior. Hence, the mind-numbing complexity we have today at both the federal and state level.
To the rescue comes Rep. Dale Kooyenga (R-Brookfield). He and his GOP colleagues in the Assembly have struck a blow for simplicity by proposing a tax and transportation plan for Wisconsin that is both bold and long overdue.
The plan would shrink, over the next decade or so, our four income tax brackets that currently range from 4% to 7.65% to a single flat tax rate of 3.95%. At the same time, it would wipe out (or reduce) a variety of tax credits, fees and the partial capital-gain exclusion that differentiates between sale of farm assets and other types of capital gains. To top it off, the plan also would eliminate the execrable state alternative minimum tax. (Wisconsin is one of only a handful of states with such a tax.)
All these special provisions that pockmark our tax laws bedevil the ordinary taxpayer, if not providers of tax software and professional tax preparers. Ironically, they often don’t achieve their intended purpose of enhancing economic activity or someone’s notion of fairness, but stymie it because of the time and expense spent trying to decipher what they mean. Good riddance, I say.
The Legislative Fiscal Bureau projects that the tax cuts, when fully implemented, would cost the state over $2 billion annually. This is a bad thing? That means over $2 billion more in taxpayers’ pockets to invest or spend, as they see fit. Moreover, the cuts could lead the way for a possible influx of small business owners and entrepreneurs from, say, financially beleaguered Illinois who would add to the state coffers with new taxpaying jobs.
Critics claim that the net result for some middle-class taxpayers is that their income taxes actually would increase (due to the loss of credits, etc.). In response, Kooyenga wisely has said he is willing to make adjustments to ensure that doesn’t happen. The larger point remains this: regardless of whatever tweaking is warranted, the underlying concept is a sound one that ought to go forward.