The (dis)United States of (more than one) America

Erick Erickson:

The media has run and retracted a host of stories about Donald Trump and his administration since Chief Justice Roberts administered the oath of office. The MLK bust was gone before it was not. The State Department senior staff all resigned before they didn’t. James Comey asked for more funding for the Russia investigation before he didn’t.

The story about Donald Trump giving away key intelligence details to the Russians has been met with a full throated denial by the White House on key details that are actually not in the Washington Post story. Given the media’s track record of stories about Donald Trump, where they report first and ask questions later, one can be excused for being skeptical of this story.

I would be but for knowing one of the sources, who is a credible, reliable source who supports the President, but is appalled and using the leaks as a way to message back to a President who has otherwise gone tone deaf to criticism of his behavior.

While the media cries wolf, so too does President Trump. He has seemingly never met a truth he has not cheated on. He confuses the ring of truth with a marriage ring.

Of course, he is also the scorpion riding the back of the frog, always wondering why he is on the verge of drowning above a dead frog.

On top of all that, let’s not ignore the politics of convenience here. If Barack Obama had done what Donald Trump did, many of the same people calling for impeachment would be doubling down on defense of Obama. For those who say Barack Obama would never do this, many of us don’t believe you. Doubly so, President Obama is still defending the repeated crossing of his red line in Syria and many of acolytes are as well, despite that action being directly related to emboldening the Syrian regime.

Everything in Washington is now relative and tribal. Each side now competes for elections to impose their own morality and choices on the people as a whole. With the left, they demand unending culture war. We must all accept and pay for abortion and we must all accept and provide goods and services to gay weddings. We cannot decide this by state, as the founders intended.

The left and right both want to use Washington as they see fit with no real restraints on their agendas. The founders intended Washington to be useful for little and the states to be useful for much. Not any more. Both sides have incorporated the Bill of Rights against the states, which the founders expressly did not and which was only done through Supreme Court divination in the twentieth century.

The stakes have grown so high as five black robed masters demand their morality be imposed on 320 million people and the federal government insists a heterogeneous people be homogenized. There is no room on either side for diversity of thought. The tribe, not the nation, is all that matters.

Washington is dysfunctional and our President is a dolt well out of his league. The only honest thing he has said of late is that the job is harder than he expected.

The left will give him no benefit of any doubt and the GOP will excuse his every action. Our nation is broken. It does not work. Neither side has an ounce of grace for the other. Traditional values are now bigotry to the left. College campuses silence dissent in ways that would make Hitler proud. Washington is supposed to do everything. And Washington does nothing well. Outrage is defined by party, not objective truth.

Perhaps it is time we end this experience. Few people really want a country as the founders envisioned and those of us who do are assailed from both sides. The stakes have been escalated beyond any amount of reason and should the Democrats eventually take back the White House, which they will, everything they have attacked Trump for will suddenly be embraced and every Republican who has defended Trump will attack the future Democrat President.

Let’s not pretend otherwise. We have Democrats running Republican congressmen off the road and reporters writing stories justifying it. We have environmental wackos blaming global warming on too many people, but they refuse to go first and kill themselves. We have Republican congressmen targeting businesses whose employees oppose the congressmen. It is only a matter of time before real shots are fired. Democrats are convinced the President is committing treason and Republicans are war criminals. Meanwhile, conservatives are convinced the left has created an existential threat against their cultural existence.

I asked once how many Americans would die because of Barack Obama’s failed policies. The same must now be asked of Donald Trump. And we must all legitimately ask how many Americans will be killed by their fellow American because of once trivial political differences that are now treated as crimes against humanity.

Our national union is fraying at the seams and I think we have reached the point where it is best to go on and tear it into fifty pieces and move on, each state its own.

The only real alternative should be an immediate repeal of the fourteenth and seventeenth amendments so that national elections become more diffuse through state legislative elections and the demands of moral and cultural homogeneity through conjured divinations in equal protection die by the wayside. Force each state, its laws, and its morality to be relevant again. That is the only way to preserve the nation.

It is safe to say that repeal of the 14th Amendment is a nonstarter, immediate or not. The 17th Amendment, which gives voters of states to elect U.S. senators instead of state legislatures, is unlikely to be repealed either. Apparently Erickson believes that the 32 states with Republican-controlled legislatures (25 of which, including Wisconsin, also have Republican governors) would produce a different Senate, though it’s not as if, for instance, a state legislature would be able to expel that state’s Democratic senator, elected two years earlier by a different legislature, from office.

Erickson’s understandable wish to make “national elections more diffuse,” of course, would serve to lock in the order of things, with liberal California and New York and the more-conservative rest of the nation. That last sentence, however, doesn’t quite accurately portray individual states, including Wisconsin, where liberal Milwaukee and Madison opposes the much more conservative rest of the state. (For that matter, liberal Milwaukee is surrounded by conservative suburbs.) Inner California isn’t nearly as liberal as its coast. There is a move to split the state of Washington into two states, the easternmost of which would be called ‘Liberty.” (Maybe Madison can be split off into its own, and call it Communist Scumbags.)

 

Road work gaps and GAAP deficits

George Mitchell on the state’s budget (cash) surplus and (GAAP) deficit:

“State controller sees red, while state officials see black”

So reads the headline on a newsletter issued last week from the apolitical (and indispensable) Wisconsin Taxpayer Alliance (WISTAX). The document offers important and under-reported information on the condition of the state treasury.

As debate on the state budget heats up, Governor Scott Walker and many legislative Republicans tout a record of “eliminated” deficits and a resulting “Reform Dividend.” Some suggest the state’s general fund is so flush it can be tapped to help address the transportation finance impasse.

How do the positive claims stand up when measured against information from the two most authoritative sources, namely, WISTAX and the nonpartisan Legislative Fiscal Bureau (LFB)?

You be the judge.

The WISTAX newsletter analyzes the state controller’s recently released Comprehensive Annual Fiscal Report for 2016.  Using the most meaningful assessment — one based on Generally Accepted Accounting Principles (GAAP) — the report shows the general fund had a $1.7 billion deficit.

A 50-state ranking at the WISTAX website shows that Wisconsin was one of only seven states to report a GAAP deficit. Of particular note: on a per capita basis only Illinois had a larger GAAP deficit than Wisconsin.

But wait…doesn’t Wisconsin have a budget “surplus”? Only if you use the essentially meaningless cash balance on the last day of a fiscal year. For example, say your checking account shows a balance of $1,000 on June 30 but you just booked a $3,000 vacation and have some unpaid medical bills. Do you have a “surplus”? Not if you count the invoices that will arrive in July’s mail.

But…hasn’t Wisconsin “eliminated” a multi-billion deficit inherited from Governor Jim Doyle?  It is true that the 2011-13 state budget wiped out what the Legislative Fiscal Bureau reports as the “structural deficit.” Now, according to the LFB, that projected shortfall is back and will exceed a billion dollars heading into 2019-21. Governor Walker’s spokesperson and some conservatives pooh-pooh that number. Apparently, in their view, the structural deficits that they portrayed in apocalyptic terms under Jim Doyle only matter if they occur on a Democrat’s watch.

As for the “Reform Dividend” budget of Governor Walker, if adopted the GAAP deficit of $1.7 billion in 2016 will grow to more than $2 billion by 2019.  Why is that? One key reason, as WISTAX recently wrote, “Proposed general fund spending [in the Governor’s budget] exceeds revenue by $155m in 2018 and by $215m in 2019.”

In summary, despite strong fiscal steps taken in the 2011-13 budget, the state’s fiscal condition arguably has declined. The per capita GAAP deficit is second only to that of Illinois. The projected structural deficit — portrayed as an ominous dark cloud under Jim Doyle — stands at a billion dollars.

Those facts notwithstanding, the Wisconsin State Journal reported last week that some legislators “are leaning toward using borrowing backed by general fund taxes to help pay for roads…”

This would continue a practice started by Doyle and accelerated under Walker. In 2006, highway debt service supported by the general fund totaled $40 million, an amount that will more than triple in 2017-18 under the budget proposed by Governor Walker. That growing cost, along with the mushrooming bill for debt paid by the separate transportation fund, is central to the transportation finance challenge now confronting the state.

Tapping the general fund for more highway debt would continue the practice, as described by the State Journal’s Matt Defour, of kicking the transportation finance down the road for another two years. This is the unavoidable result of Governor Walker’s opposition to raising the gas tax. Given projections of a structural deficit and growing GAAP deficit, all that’s certain is that the legislature will face more daunting issues when it convenes in January 2019.

For one thing, would be helpful if someone (perhaps state Sen. Howard Marklein (R–Spring Green), a CPA) who can understand the difference between cash and GAAP accounting as it applies to government can explain how to eliminate the state’s GAAP deficit. Since each counts revenues and spending differently, though I’m not an accountant, I don’t think cutting $1.7 billion from the (cash-measured) budget will necessarily eliminate the GAAP deficit, though if it did I’d be all in favor of it.

This proves yet again that fiscal irresponsibility is not necessarily tied to one political party, and that fiscal responsibility must not be tied to election results, and must be mandated instead by constitutional limits on spending and taxation, so that the rights of the taxpayer shall not be infringed by wasteful government spending. (For instance, requiring GAAP, not cash, balanced budgets at the state level.)

 

The Deplorables’ middle-finger vote

For those who still fail to grasp why Donald Trump won the presidential election, read Kyle Smith:

”We’re voting with our middle finger,” a Trump supporter in South Carolina told a reporter last fall. No doubt.
Many a liberal observer saw the Trump vote as a rageful taunt aimed at racial and sexual minorities. But there is much more to Trump’s support than that, argues law professor Joan C. Williams in her new book White Working Class: Overcoming Class Cluelessness in America.
Making an admirable and research-driven effort to see things from the point of view of her subject, author Williams unpacks exactly how the white working class (WWC) viewed the election, and how their history-making choice made a lot of sense given their concerns.
The WWC is plagued by crisis within and without — household income in this group has been all but stagnant for 40 years. The mortality rate for whites 45 to 54 years old with no more than a high-school education has increased by 134 deaths per 100,000 people from 1999 to 2014. Opioids arrived and factories left. Democrats at best didn’t seem to notice; at worst they seemed to be causing misery by supporting NAFTA and mass immigration that drives down wages while imposing environmental policies meant to crush carbon-intensive industries. Then they mocked their victims as rednecks on the wrong side of history.
Williams isn’t interested in mocking her subjects. She is a liberal who is genuinely worried about the plight of the WWC. An admitted silver-spoon baby, she married someone she calls a “class migrant” — a guy from the working class (he’s an Italian-American from Bay Ridge, Brooklyn) who earned a spot at Harvard Law School, where the couple met. Right away, she was unable to hide her fascination with his people. At a family dinner, his father took a dislike to her because Williams seemed to be studying everyone like an anthropologist. …
If your answer to the question “Who am I?” is “I’m a professor,” then your identity doesn’t change whether you’re in London, Miami or San Francisco. Elites have a tendency to leave home for college, then flit from one global capital to another. Not so the WWC, which Williams defines as white middle-class people (those in the $41,000 to $132,000 income range) who don’t have a college education. They’re strongly attached to their hometowns, to the people they feel comfortable with, to what they perceive to be the shared values of their communities.
Tradition and stability matter. “The dream is to live in your own class milieu, where you feel comfortable — just with more money,” Williams notes.
Donald Trump epitomizes this idea, having made his fortune “in garish casinos that sold a working-class brand of luxury.” Gold-covered everything is exactly how you’d decorate if you were from Appalachia and struck it rich with no intervening period of finishing school at Stanford or Yale.
To the rootless global elites, though, tradition is subordinated to transgression. What society considers edgy, elites deem worthy of their praise. It isn’t acceptable merely to accept gay life, for example — it must be celebrated. Recalling moving to San Francisco and observing a fully naked man walking down the street, Williams recalls feeling proud of herself for being tolerant of such norm-shattering. Among the elites, she says, “It’s a point of pride not to be one of those petty bourgeois who’s shocked by sexual transgression.”
This attitude not only stuns the WWC but strikes them as a kind of attack on everything they hold dear. To them, bicoastal urban America is a joke to which they don’t get the punchline. They feel excluded, marginalized, left out. Worse than any of this, they feel condescended to, and it infuriates them, Williams writes.
Hillary Clinton did a marvelous job of confirming their suspicions when she said — in New York City, at an LGBT event — that “You could put half of Trump’s supporters into what I call the basket of deplorables. Right? The racist, sexist, homophobic, xenophobic, Islamophobic — you name it. And unfortunately, there are people like that. And he has lifted them up.”
Being called names such as these is exactly what gets the white working class fired up. She might as well have told everyone from Pennsylvania to Wisconsin, “Don’t vote for me.” Outside of Chicagoland, they didn’t. …

Dismissing the WWC as racist doesn’t make a lot more sense than calling them misogynist, Williams argues, citing evidence that upper-class white people are simply better than the working class at camouflaging race-based judgments. You’ll rarely catch managerial types uttering racial slurs, but consider the “Greg/Jamal” study in which corporate recruiters were sent identical resumes, one from “Greg” and one from “Jamal.” The Jamals of the world proved to have a much more difficult time landing interviews.
As for why a $60,000 a year mechanic could feel affinity for a New York billionaire, it’s because WWC consider moguls to be fantasy figures. Trump represents something aspirational; they picture themselves in that boardroom firing people.
Managers, on the other hand, remind them of the bosses they resent. “Most working-class people have little contact with the truly rich outside of ‘The Apprentice’ or ‘Lifestyles of the Rich and Famous,’ ” Williams writes, “but they suffer class affronts from professionals every day: the doctor who unthinkingly patronizes the medical technician, the harried office worker who treats the security guard as invisible, the overbooked business traveler who snaps at the TSA agent.”
Hillary Clinton reminds them of the prissy know-it-alls who have been bossing them around their whole lives — she’s the lady who tells you there’s no eating in the library, as columnist Jonah Goldberg once put it. They don’t resent Trump, though: They imagine being him and firing her.
Clinton’s rhetoric about helping the poor also turned off the WWC: The have-a-littles disdain the have-nots. Working people in the middle are proud of their discipline and resent the spongers they perceive as being rewarded for having none. They don’t romanticize welfare recipients as being hapless victims of circumstance because they see them at the grocery store every week. …

Bill Clinton understood this kind of thinking, which is why he signed welfare reform in 1996, when he carried such states as West Virginia, Kentucky, Arkansas, Tennessee, Missouri and Louisiana. No Democratic presidential candidate since has won any of those states, and they’re no longer even trying.
Bill famously advised his wife’s campaign to do more to reach out to the WWC, but in what will surely be recalled as one of the defining moments of hubris on Team Hillary, campaign manager Robby Mook replied, “the data run counter to your anecdotes.”

There is certainly no sense that Democrats grasp this.

Two votes for the Kooyenga plan

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.

For 2017, the Tax Foundation ranks Wisconsin’s overall business tax climate 39th out of 50 states — and its individual income tax burden 43rd.   I might add that this dubious distinction holds despite the fact that Scott Walker has been governor for the last six and one-half years.

Compare Wisconsin with two states commonly viewed as being progressive or at least politically moderate: Washington (two Democratic U.S. senators, a Democratic governor and legislature partially controlled by Democrats) and New Hampshire (two Democratic U.S. senators). Neither has an individual income tax except, in the case of New Hampshire, on investment income. Although Washington charges a steep sales tax, New Hampshire has none at all. Not coincidentally, they both rank in the top 20 with respect to overall business tax climate.

Wisconsin need not go that far to be competitive, but it must do a lot better than it is now. The income tax part of Kooyenga’s plan offers that opportunity.

Insofar as the rest of the plan is concerned, its virtues are a bit more mixed, but still positive. It would apply the state’s 5% sales tax on gas, while reducing the per-gallon gas tax by 4.8 cents and the state mandate that now requires retailers to mark up gasoline prices. Some say the net effect would not lead to a price increase at the pump, whereas others, including Walker, dispute that.

The particular worry is that over the short term, taxes might increase in the aggregate because the income tax reductions would phase in over a longer period. That is especially worrisome to Walker because it now appears he plans to run for a third term as governor next year.

What motivates Kooyenga and others to impose a sales tax on gas, however, is to raise revenue in the least painful way, and reduce borrowing, for long-deferred road repairs. The problem with Wisconsin’s habit of more and more borrowing is that now repayment of debt consumes over 20% of the state’s revenues.

Here again, however, Walker seems to be interested in the short term, i. e, November 2018.Toward that end, borrowing can be disguised more easily than a tax increase, even one that is potentially offset by other tax and cost reductions. (Walker has proposed $500 million more in  borrowing in his budget proposal to partially close a shortfall in the transportation fund.)

Another intriguing part of the plan is to seek federal approval for collecting tolls on interstate highways in Wisconsin. That, too, could go toward defraying road construction costs. Why not have drivers (or their employers) who actually use those roads — including a large number of out-of-staters — bear a portion of such costs?

Of course, most Democrats cringe at the notion of an income tax cut. Even some Republicans scoff at Kooyenga’s plan, such as Sen. Luther Olsen (R-Ripon), who compared it to “Rube Goldberg.” Wrong, Senator Olsen. What we have now is of the Rube Goldberg variety, with punishing taxes, blinding complexity and overreliance on ultimately self-destructive borrowing. Kooyenga’s  plan starts to lead us out of this morass. Kudos to him.

Next, gas station owner Krist Atanasoff:

Through hard work over many years I’ve earned the trust of my repeat customers and I am now the proud owner of 37 gas stations in Wisconsin and 36 gas stations in Michigan. The gas I sell at all the stations comes from the same wholesaler, so the cost is identical in both states. It would be a reasonable expectation that the Michigan price of fuel would be higher since the Michigan gas tax (which does include sales tax) is five cents higher than Wisconsin’s gas tax.

However, the opposite is true. Our gas stations in Wisconsin sell fuel at a higher price than Michigan.You read that right.

Despite Michigan’s higher tax, our prices in Wisconsin are higher. Today the price of our fuel in in Land O’Lakes, WI is $2.41 versus our station 8 miles away in Watersmeet, MI where our gas is $2.25, a 16 cent difference.

Trust me, I’d like to offer lower prices to my Wisconsin customer. But a dumb state law forbids it.

So why are the prices in Wisconsin higher? The Minimum Markup law.

Wisconsin is one of two states in the country that specifically identify and protect the profit margin on the sale of gas. The Wisconsin law mandates a 9.18 percent markup.  I’d like to compete with my peer s , not only on cleanliness and service, but on price. But I can’t.

Fortunately, the recently-announced Assembly Transportation Reform plan “The Road to a Flat Tax,” would at least lower the state minimum markup law to three percent. This is significant drop and will absolutely positively lower the price Wisconsin residents pay for gas. I assure you, at my gas stations consumers will see lower prices at our pumps compared to today’s pre-reform prices if Wisconsin adopts the Assembly Transportation Plan.

In 2011 Wisconsin Republicans passed Act 10 to not only fix a pressing budget gap, but to initiate long-term reforms that would strengthen budgets for the long-term. The Assembly transportation plan is the Act 10 of the transportation fund. The plan corrects bad policies relating to an extremely lucrative and unique advantage for Wisconsin’s petroleum industry which also cost taxpayers significant money.

As a petroleum marketer, I don’t want the crony capitalist protections so many in our industry want. I just want to compete without government favor.

Kooyenga’s plan includes a $2 billion tax cut, as opposed to Walker’s less than $600 million tax cut. In this chronically overtaxed state, guess which tax plan is preferable.

 

The price of driving

The Wisconsin State Journal reports:

A sweeping Republican proposal to fund transportation and cut taxes would flatten income tax rates, lower the gas tax and raise new funding for roads by applying the sales tax to gasoline.

The goal of the plan, which is subject to change, is to hold gas prices steady by lowering the state’s 9.18 percent minimum markup on gas prices, according to Rep. John Macco, R-Ledgeview, chairman of the Assembly Ways and Means Committee.

That means more money for the transportation fund could come from the bottom lines of companies that benefit from higher retail gas prices under the minimum markup law — both large national retailers and locally owned stores. Critics, however, say the money could also end up coming from consumers at the pump.

“If we do it right, the price at the pump will be exactly the same,” Macco said.

One of the goals of the proposal is to cut borrowing in Gov. Scott Walker’s 2017-19 budget plan from $500 million to $200 million.

In addition to the transportation funding changes, the plan also includes the first steps in eventually creating a 4 percent flat income tax over the next 11 years, Macco said. He declined to offer specifics.

Rep. Dale Kooyenga, R-Brookfield, the architect of the plan, declined to comment before it is presented to the Assembly Republican caucus on Thursday.

Macco, who has been briefed on the plan, agreed to discuss some of the details after the Milwaukee Journal Sentinel published an outline Tuesday citing unnamed sources.

Under the current thinking, the gas tax would be reduced by 4 to 7 cents per gallon, Macco said. It is currently 30.9 cents per gallon. Also the minimum markup on gasoline — currently 9.18 percent — would be reduced so as to bring gas prices down another 7 cents, Macco said.

The Depression-era Unfair Sales Act prohibits retailers from selling merchandise at less than cost and also sets a minimum price for tobacco, alcohol and gasoline.

The gas price reductions would be offset by applying the 5 percent state sales tax and any local sales tax to gasoline, which currently costs $2.26 in Madison.

Asked about Kooyenga’s proposal after Tuesday’s Assembly session, Rep. John Nygren, who co-chairs the Legislature’s budget-writing committee, said only that the plan will be “revenue-neutral,” a term that typically means a proposal’s net impact to state revenues is zero when accounting for all tax and fee changes.

Walker offered a similar proposal during the 2014 gubernatorial election. He has discussed the Assembly transportation proposal with Kooyenga, but didn’t want to divulge details Tuesday because it is in flux.

“If people are talking about cutting the gas tax as a way of reforming the system as opposed to raising revenue, I think that’s certainly something worth looking at if it’s a reduction in the gas tax,” Walker said.

Walker has sparred openly with Assembly Speaker Robin Vos, R-Rochester, about how to resolve a nearly $1 billion shortfall in the transportation fund in the upcoming biennium.

Walker has proposed borrowing, delaying projects and using general fund taxes to pay for transportation, but he has said he will veto a gas tax increase. Vos has called for leaving all options on the table, including raising the gas tax as a long-term solution.

Democrats have called for indexing the gas tax to inflation, a way of raising money to pay for road projects that was eliminated in the 2005-07 budget.

Macco noted by applying the sales tax to gasoline, the amount of revenue the state receives will increase as gas prices increase, though it would also decrease as gas prices decrease.

Part of the reason transportation funding has stagnated is cars are becoming more fuel-efficient and people are buying less gasoline.

Brandon Scholz, executive director of the Wisconsin Grocers Association, panned the proposal, saying the minimum markup law doesn’t increase prices as much as opponents say it does. The result will be retailers passing on the cost of the sales tax increase to consumers, he said.

“This is a tax increase. This is not a tax decrease,” Scholz said. “It’s kind of a smoke-and-mirrors gig.” …

Todd Berry, president of the Wisconsin Taxpayers Alliance, said the proposal is a commentary on how far Assembly Republicans have to go to persuade Walker to support increased revenue for roads, especially when he previously said he would support a gas tax increase if there was an offsetting tax cut.

“It is truly amazing and amusing the number of hoops they have to jump through to effectively raise the gas tax and index it,” Berry said. “You can’t fault them for the creativity or the cleverness of it.”

It will be interesting to see where this proposal goes. Being revenue-neutral is good, because Wisconsin’s taxes should be cut, not increased.

One simple step that I’m surprised hasn’t come up before is to apportion sales taxes from motor vehicle purchases to road uses. That would mean that sales tax revenue couldn’t be used for something else, and government hates that.

The minimum markup on gasoline should be eliminated, not reduced.

The continuing Democratic collapse

It is supremely ironic that, despite, as measured by opinion polls, the unpopularity of Donald Trump and lack of popularity of Gov. Scott Walker, national and state Democrats continue to screw up.

Christian Schneider lists how things have gone for state Democrats, including Democrats not labeled as such, in the past year:

On the night of April 6, 2016, an exhausted Rebecca Bradley stood before her campaign supporters at the Crowne Plaza in Wauwatosa. Bradley had just been elected to a 10-year term on the state’s Supreme Court, and summed up the experience to her election night party by quoting Winston Churchill: “When you’re going through hell, keep going.”

In the preceding month, Bradley had been through hell. The race had been a brutal one, with the conservative incumbent justice garnering some of the worst media coverage imaginable. In the prior month, opposition groups had dug up embarrassing college newspaper columns Bradley wrote as an undergraduate that took controversial stands on homosexuality and abortion.

Bradley apologized for the pieces, and noted they were written in a fit of despondency over the election of Bill Clinton a quarter-century earlier. But the damage was done. By the end of the campaign, the only way Bradley would have garnered favorable media coverage would have been if she had changed her last name to something more sympathetic, like “Jong Un.”

Yet despite punishing media coverage for a full month, Bradley stood victorious at the podium on election night. It was a moment of clarity for the left in Wisconsin: In races that pit a conservative versus a liberal, voters prefer the conservative virtually every time — even badly damaged ones. In the most recent Supreme Court election, progressives couldn’t even muster a candidate against one-term incumbent conservative Justice Annette Ziegler.

Undoubtedly, much of the right’s success is due to the way conservatives have successfully framed Supreme Court races as “law and order” competitions, where the candidate on the right typically supports tough sentences for criminal behavior and the liberal candidate favors letting felons out on the street.

But the decline of liberals on the court also has tracked closely with the decline of Democrats both in the state and nationally. Since the 2010 elections that flipped control of both houses of the Legislature and the governorship from Democrats to Republicans, the GOP has dominated state elections. (The only hiccup was 2012, which saw Barack Obama carry the state and Democrat Tammy Baldwin win the U.S. Senate seat vacated by Herb Kohl.)

To repeat: In 2008 a majority of Wisconsin voters voted for Barack Obama for president, Democrats in all statewide offices except attorney general, and Democratic majority control of the Legislature. Since that election Democrats have lost all of that except for Secretary of State Douglas La Follette (some things defy explanation) and Superintendent of Public Instruction Tony Evers. Four elections — 2010, 2012, 2014 and 2016 — have been losers for Democrats except for Obama and Baldwin in 2012, and even in 2012 Republicans maintained majority control of the Legislature. And conservatives have won every Supreme Court race in that timespan except one.

For one reason, let’s go to Morning Joe:

JOE SCARBOROUGH: From everything you have seen, how would you try to best explain Democrats losing more than a thousand state legislative House and Senate seats over the past six years?

TOM BEVAN: Two words: Identity politics.

These working-class voters in the rust belt and other places, they don’t care about who is going to the bathroom in which bathroom in North Carolina.

They look at the Democratic Party and they see someone running against the ‘War on Women,’ they see Black Lives Matter, they see environmental activism. All of that stuff has become a brand of the Democratic Party, which for a lot of these folks it comes down to the economy. It comes down to say-in, day-out. That’s where Democrats have really lost ground.

For another, let’s go to the videotape:

That made New York University Prof. Jonathan Heidt observe to the Wall Street Journal

“People are sick and tired of being called racist for innocent things they’ve said or done,” Mr. Haidt observes. “The response to being called a racist unfairly is never to say, ‘Gee, what did I do that led to me being called this? I should be more careful.’ The response is almost always, ‘[Expletive] you!’ ”

He offers this real-world example: “I think that the ‘deplorables’ comment could well have changed the course of human history.”

… and author Charles Murray say, as reported by Real Clear Politics:

I think Jonathan Haidt, the social psychologist who started the academy was right. He was right. he had an interview a few weeks ago where he said the ‘Deplorables’ comment by Hillary Clinton changed the history of the world, and he may very well be right. That one comment by itself may have swung enough votes, it certainly was emblematic of the disdain with which the New Upper Class looks at mainstream Americans.

And mainstream America notices this… People will say: ‘You don’t understand. We don’t particularly like Donald Trump, we won’t defend his character. He is our murder weapon.’

I think that is a pretty short, accurate way of showing what function Trump served…

Wisconsin Democrats seem to have learned nothing. When Joseph Jakubowski was arrested without a shot being fired, Sen. Jennifer Shilling (D–La Crosse) said:

“The threat of gun violence is an all too real struggle for families across Wisconsin. Today, that reality hit home in the small town of Viola. Tomorrow, it will be another community.
“We should use this opportunity to strengthen our communities and promote commonsense public safety reforms. It’s time for leaders in Wisconsin to stand up to the powerful gun industry and take proactive steps to keep deadly firearms out of the hands of dangerous individuals.”

You can wait until hell freezes over for Shilling to apologize to her gun-owning constituents. Or for Clinton to apologize to the Deplorables.

 

Happy (?) Tax Freedom Day

Every year, the Tax Foundation announces:

Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes—individual as well as payroll, sales and excise, corporate and property taxes—and divides them by the nation’s income. In 2017, Americans will pay $3.5 trillion in federal taxes and $1.6 trillion in state and local taxes, for a total tax bill of $5.1 trillion, or 31 percent of national income. This year, Tax Freedom Day falls on April 23, 113 days into the year.

That was Sunday. When is Wisconsin’s Tax Freedom Day?

Wisconsin has the 40th latest Tax Freedom Day, which means this state has the 11th highest federal, state and local taxes as a percentage of income. Only Minnesota and Illinois have higher tax bites out of their income than Wisconsin in the Midwest.

Tax Freedom Day was April 12 in 2010, April 16 in 2011, April 21 in 2012, April 20 in 2013, April 22 in 2014, April 25 in 2015, and April 27 last year. You’ll notice that that is not a positive direction. I would wonder why people vote for Republicans who promise to cut taxes and then don’t cut taxes meaningfully, except that Democrats could not care less about cutting taxes in a remotely meaningful way. (As it is, Republican supporters should ask their Republican elected officials that question.) No, $4.7 billion in tax cuts this decade are not sufficient, and $600 million in the proposed 2017–19 state budget are not sufficient either.

The second time I noted Tax Freedom Day on this blog, I listed what paying nearly $1 out of your $3 in income (as opposed from the 10 percent God asks):

  • A substandard education system. (The fact that there are some above-average schools doesn’t change that reality.)
  • Teacher unions that spread lies during elections. (Though their political power has shrunken in the post-Act 10 world.)
  • A statewide teacher union that pays its management six-digit salaries and pays its employees on average $95,000 per year, almost twice as much as the median family income in this state.
  • An extremely substandard business climate and perennially underperforming economy. (Very small steps have been made in the correct direction, which are the result, again, of our bad tax system.)
  • 3,120 units of government.
  • A political culture that is out of touch with the rest of the planet, let alone the rest of the state.
  • Insufficient political will to change any of these realities.

It is my contention that Wisconsinites overpay for government services, including, yes, schools and the UW System. As I wrote on a previous Tax Freedom Day, think of the worst teacher, the laziest or most incompetent government employee you can think of, or the politician you wouldn’t vote for if he or she were running against Joseph Stalin, and then remember: your taxes are paying his or her salary and (Rolls–Royce-style) benefits.

It is a fact that our quality of life is not improved by government; quite the opposite, in fact. It is also my contention that, rather than rely on one political party to hold the line on taxes and spending, taxpayers need to be protected from elected officials regardless of party (or lack thereof) by enacting constitutional (as opposed to legislative) controls on taxes and spending and requiring referendum approval for all tax increases.

The disorganized political party

Will Rogers famously said, “I am not a member of any organized party — I am a Democrat.”

I think the Democratic Party of Wisconsin is organized, but that’s hard to tell based on its results, as noted by Jerry Bader:

The Republican Party of Wisconsin launched a website Thursday morning with the aim of bringing the dysfunction of the Democratic Party in Wisconsin into sharp focus:

  • Historic Electoral losses going back to 2010. The electoral carnage is stunning. Wisconsin, once considered a purple state, is now bright red. And recent history is cruel to Democrats: U.S. Senator Ron Johnson came back from far behind in the polls to defeat former Senator Russ Feingold. Donald Trump became the first Republican since Ronald Reagan in 1984 to carry Wisconsin. And after a decade of high-priced mud fest State Supreme Court races, liberals couldn’t field a candidate against Justice Annette Ziegler this spring. Republicans hold the State Senate, the Assembly and the governor’s mansion.
  • Senator Tammy Baldwin’s scandal at Tomah.
  • A field of potential gubernatorial candidates dropping out left and right. At the moment the only announced Democratic candidate is a 25 year old who lost a California congressional race. Virtually every perceived “A” list candidate has announced they won’t be running. Governor Scott Walker isn’t without his vulnerabilities but he can’t lose if Democrats don’t find a candidate.
  • Democrats playing games (Democrats playing Bingo during Governor Scott Walker’s State of the State address) instead of doing their job.
  • While the media focuses on Republican infighting on the transportation issue, it ignores the virtual collapse of the DPW and the fact that the GOP is, in fact, advancing its agenda this session.

In addition to the website, the RPW is also launching a digital ad to reinforce the message that Wisconsin’s mainstream media is mostly ignoring: the Democratic Party in Wisconsin is broken. Baldwin is vulnerable and a robust field of Republican candidates are considering a run for the nomination to challenge her. Walker has already won three elections for governor as he is poised to seek a third term.

The site also contains a compendium of news stories chronicling the Democrats plight in Wisconsin in recent years, featuring embarrassing headlines and Politifact ratings.

If 2016 showed anything, it is that nothing is certain in politics until it happens. But the RPW’s new website illustrates just how ravaged the DPW is. And it will likely be a theme Republicans ride all the way through 2018.

The latest gubernatorial non-candidate is Dane County Executive Joe Parisi, who announced yesterday he’s not running for governor either. That leaves the Democrats with the aforementioned California loser and possibly Rep. Dana Wachs (D–Eau Claire), who at least has not announced he’s not running yet.

 

Because politicians gotta politicize

This popped up Friday morning:

After the peaceful apprehension of Joseph Jakubowski, Senate Democratic Leader Jennifer Shilling (D-La Crosse) released the following statement:
“I want to thank all of the law enforcement officers who have worked tirelessly over the past several days to bring about a peaceful resolution to this situation.
“The threat of gun violence is an all too real struggle for families across Wisconsin. Today, that reality hit home in the small town of Viola. Tomorrow, it will be another community.
“We should use this opportunity to strengthen our communities and promote commonsense public safety reforms. It’s time for leaders in Wisconsin to stand up to the powerful gun industry and take proactive steps to keep deadly firearms out of the hands of dangerous individuals.”

I posted this Friday morning, and my Facebook feed temporarily blew up from all the response. This blog is based on some of those comments.

First: Not to defend what Jakubowski did, but how many shots did Jakubowski (as far as we know) fire after he (allegedly) stole guns from the Janesville gun shop? Zero. Despite all the threats, no shots were fired, either by Jakubowski (as far as we know) or law enforcement.

How many of Shilling’s gun-owning constituents shot somebody the day this was released? Zero, as far as we know, and if not in self-defense every shot fired at someone was illegal under long-existing laws.

Jakubowski is a convicted felon. Unless his gun ownership rights were restored post-conviction, his possession of any guns is illegal. The (alleged) break-in and thefts were both illegal. Making terroristic threats is illegal. Why do the gun ownership rights of law-abiding people need to be taken away because of what Jakubowski did?

I live in an area where if you assumed every house includes at least one gun you’d be correct more often than not. There is a gun store down the street. And I feel perfectly safe surrounded by guns and gun owners. (Many of whom may well be concealed-carrying without my even knowing it.)

This may bring to mind an infamous past statement:

As a Facebook Friend of mine puts it:

The way you “stand up to the powerful gun industry” is to not buy their products. Anyone who is afraid of guns should not own one, and nobody has ever suggested that they do. When this nut-case was running loose in Wisconsin, people with guns felt safer than those without – that is how we do safe spaces without tax-payer money.

And as another Facebook Friend puts it:

It should always be the government’s responsibility to prove why something should be prohibited; it should never be the people’s responsibility to prove why something shouldn’t be.

And as another Facebook Friend puts it:

She should have stopped after this portion of her message: I want to thank all of the law enforcement officers who have worked tirelessly over the past several days to bring about a peaceful resolution to this situation.

 

Imagine lower taxes

Americans for Prosperity is hosting this event tonight:

I do not live anywhere near Wauwatosa, and it being Maundy Thursday we have church tonight. But the MacIver Institute has a summary that starts with tax cuts since Gov. Scott Walker took office in 2011:

It should not be simply glossed over how much progress Wisconsin has made reducing taxes in recent years. In 1994, less than 25 years ago, Wisconsin ranked 3rd nationally in overall tax burden and our taxes were 16 percent above the national average.

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. According to the Department of Revenue, the typical family in Wisconsin has seen their income taxes cut by $1,159. Wisconsin’s state and local tax burden, as reported in December 2016 Census Bureau data, fell to 10.8 percent of personal income, the 16th highest among the states. By comparison, the year prior, Wisconsin’s tax burden ranked the 15th highest at 10.9 percent of personal income.

However, according to the Tax Foundation …

… Wisconsin still has some of the highest income tax rates in the U.S. Even worse, according to WalletHub, Wisconsin has the third highest state and local taxes as applied to a median-income U.S. household, described as “an annual income of $54,286 (mean third quintile U.S. income); [that] owns a home valued at $178,600 (median U.S. home value); [and] owns a car valued at $23,070 (the highest-selling car of 2016); and spends annually an amount equal to the spending of a household earning the median U.S. income.”

What about based on median Wisconsin income? Wisconsin ranks much better. Based on a household with “an annual income equal to the mean third quintile income of the state; [that] owns a home at a value equal to the median of the state; [and] owns a car valued at $23,070 (the highest-selling car of 2016); and spends annually an amount equal to the spending of a household earning the median state income,” Wisconsin ranks not third highest, but 10th highest. Doesn’t that make you feel better?

MacIver admits:

While Walker and the Republican Legislature should be lauded for all the taxes they have cut, these tax cuts have done little to improve Wisconsin’s overall tax ranking. Similar to the Census Bureau data mentioned above, the nonpartisan Tax Foundation’s most recent ranking of state and local tax burdens puts Wisconsin at the fourth highest in the nation and highest in the Midwest. In the same study, the Tax Foundation found that state and local taxes take up 11 percent of all personal income in Wisconsin every year. These tax cuts have also done little to stop or even contain the never-ending and seemingly inevitable growth of the state budget. The 2011-2013 state budget spent over $66 billion from all funding sources. The 2015-17 state budget spent nearly $74 billion.

Clearly, it is time to think about the next big and bold reform that will transform our state and make Wisconsin an economic powerhouse for generations to come. It is time for a flat tax in Wisconsin.

Wisconsin’s reputation as a high-tax state has a significant impact on the state’s ability not only to attract newcomers, but also to retain those who are already residents. Annually, Wisconsin loses an estimated $136 million in adjusted gross income to tax migration. The high tax burden drives individuals to leave for those states with lower tax burdens or no income tax at all, such as Florida and Texas. One study, which examined Internal Revenue Service data from 1992 through 2015, showed that Wisconsin lost $3.40 billion in wealth to Florida, $1.08 billion to Arizona, and $769 million to Texas during the 23-year period. In that time, almost 93,000 people migrated from Wisconsin – that’s more than the entire population of Racine, the state’s 5th largest city. The loss of so many individuals, their businesses, and their economic activity does not bode well for the economic future of the state. Lower, flatter income taxes are one way to help stem the tide of emigration from Wisconsin.

Low, flat state income tax rates are actually common throughout the country. Seven states levy no individual income tax at all. New Hampshire and Tennessee currently tax dividend and interest income, though recent reforms in Tennessee have set a glide path to total elimination of the income tax in 2022. Eight states have flat individual income tax structures, and 33 states, including Wisconsin, levy progressive tax rates based on income level.

In today’s mobile economy, every state must compete for new residents and new businesses or risk losing them to other states. While climate and the local job market are big factors in a person’s decision to move, a state’s tax burden plays an important role in keeping recent graduates, people looking for a better life, and retirees from moving to a state with a lower tax burden.

The personal income tax, not just the corporate tax, is also becoming a bigger factor in the financial health and growth of businesses. The number of pass-through entities has nearly tripled since 1980, making pass-through businesses the most common business form in the country. Pass-through entities are not subject to typical corporate taxation, but are instead taxed under the individual income tax. Profits are passed through to the shareholders or partners of these companies and become part of their income. More than half of Wisconsin’s workforce is now employed by pass-through businesses, giving the individual income tax even greater importance to the livelihoods of Wisconsinites and the success of their businesses. In Wisconsin, pass-through businesses pay a top marginal income tax rate of over 48 percent – the 8th highest rate in the country.

Taking nearly half of a company’s income is detrimental to success and economic growth. Many states are wising up to the fact that high income taxes hurt competitiveness by punishing success and hard work. Despite the rhetoric that progressive taxation results in a fairer outcome, evidence shows that progressive income taxes are actually associated with higher income inequality.

This report sets out to explain why Wisconsin should continue to ratchet down its relatively high individual income tax system and many different rates to one flat rate. Evidence from a variety of sources – economic, social, and fiscal health metrics, as well as academic studies – demonstrates the benefit of a lower and flatter income tax structure. After examining Wisconsin’s position within the Midwest and considering recent reforms around the country, this report will recommend that Wisconsin transform its progressive income tax to a flat 3 percent tax rate for all taxpayers over an eight year period. In subsequent papers, we will continue to build our case through a comparison with Indiana, a state similar in size and demographics to Wisconsin, and will recommend specific steps that Wisconsin can take to make a flat tax a reality.

A systematic glide path to a 3 percent income tax rate would give Wisconsin the most competitive income tax among Midwestern states while greatly improving the state’s attractiveness on a national level. Such a move would have a significant impact on the incomes of all Wisconsinites and most importantly, would allow working class people to keep more of their income. A 3 percent flat tax would be a tax cut for everyone in Wisconsin. Under the current “progressive” tax code, our lowest tax rate of 4 percent for those who make just $11,120 per year is the 4th highest tax rate among the 33 states with a progressive income tax system.

Spacing out the rate reductions over a number of years protects the state budget from sudden and steep revenue drops, giving sufficient time to make gradual adjustments so the transition to the new tax system is smooth.

At the risk of hijacking my own blog, this is necessary but not sufficient. It should not take one party’s policies to enforce fiscal discipline. (Which is imperfect as it is since the state’s books are not balanced according to Generally Accepted Accounting Principles, even though the state mandates GAAP-balancing for every other unit of government.) Voters could vote for Democrats in the next election, and the spending and taxation spree of the late 2000s would resume. Politicians regardless of party (or lack thereof) must be prevented from overspending and overtaxation, and the only way to do that is to enact constitutional limits on spending and taxation (for instance, limiting spending growth to population growth plus inflation) and required referendum approval for all tax increases at all levels of government.

Watch this space for more on the AFP proposal.