Tax Cuts Play Central Role In Governor's Race

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Premiere Date: 
August 22, 2014

Tax Cuts Play Central Role In Governor's Race

Frederica Freyberg reports on the impacts of a series of tax cuts from Gov. Scott Walker.

Episode Transcript

Frederica Freyberg:

Central to Governor Scott Walker's re-election bid are his $2 billion in tax cuts. But what does his challenger, Democrat Mary Burke, say about the cuts? Where do they come from and will they help create jobs? We try to answer some of these questions by reaching out to experts and nonexperts alike.  

Man:

I think tax cuts are good.

Jon Peacock:

We all love tax cuts.

Karl Buelow:

Everybody loves a tax cut.

Stephen Malpezzi:

I love cutting taxes.

Frederica Freyberg:

There's a lot of love for tax cuts, but that affection comes with caveats.

Scott Walker:

We reduced tax burden by more than $2 billion.

Frederica Freyberg:

Just where did those cuts come? Since Governor Scott Walker took office and through the current budget there have been about $750,000 million in income tax cuts. For the average 2014 filer that will amount to about a $200 reduction. In the same period there's been $535 million in property tax relief. That amounts to about a $130 reduction for the average homeowner. The remaining $700 million is accounted for in scores of individual and business credits and deductions and exemptions. Scott Walker both wants to give individuals money back in their pockets and induce job growth with tax cuts.

Scott Walker:

You see, we understand that as hard-working taxpayers, as consumers and employers, you're going to put that money right back to work.

Frederica Freyberg:

But according to the labor department's quarterly census, Wisconsin's job growth lags neighboring states and isn't keeping pace with projections Walker made coming into office. So what gives? Wisconsin Taxpayers Alliance president, Todd Berry.

Todd Berry:

Fundamentally it follows the national cycle. We may vary slightly from that. But because that is true, you cannot have a governor and legislators wave a magic wand and impact a $250 billion plus economy.

Frederica Freyberg:

Experts agree state economic growth is not a quick recipe.

Stephen Malpezzi:

There's no single secret sauce or magic thing that you do and then all of a sudden your budget is fixed, your state starts to grow.

Frederica Freyberg:

Still, economist Steve Malpezzi is onboard to appoint and with those caveats.

Stephen Malpezzi:

I want taxes to be cut. If we can do that without having that basically just dive into similar cuts in essential services. You want growth, state governments that spend more of their money on some of the core functions of government, education and infrastructure as two of the essential elements.

Frederica Freyberg:

Then there's the matter of whether the state could afford them.

Jon Peacock:

It's just a question of did the legislature go maybe a little too far too fast because revenue goes up and down, and right now it looks like we might be headed back into the red again.

Frederica Freyberg:

In fact, the state Department of Revenue reported at the end of the fiscal year that income tax collections are short of expectations. The state's next budget has a projected shortfall of $642 million. Governor Walker counts on tax cuts to stimulate the economy. The response from his Democratic challenger, Mary Burke.

Mary Burke:

But I disagree with the way Scott Walker has done this. He's been fiscally irresponsible. He's spending money that we don't have now. The latest estimates show that our state revenues aren't keeping up with the budget forecasted.

Scott Walker:

Putting money back in the hands of the hard-working taxpayers I think is totally the responsible thing to do. I think it's irresponsible when you have a surplus after you pay those bills off to keep it in the hands of government when there are people all across the state who desperately need it.

Stephen Malpezzi:

My own preference would be to build in more of a fiscal cushion, you know, because you have these ups and downs and these inabilities to forecast accurately.

Frederica Freyberg:

Complicated tax and budget policies aren't lost on people we stopped to talk with at the Sauk County Fair this summer.

Brenda Ketelhut:

Once the money is in the coffers or whatever, it should just stay there. I don't think you need to send it back out to the people again.

Karl Buelow:

Everybody loves more money in their pocket, but on the same stance, you got to pay your bills. And when we're having a shortfall in the transportation budget for repairing highways and those projects are falling short, tax cuts may not be the best option at the time.

Wayne Rider:

They help some, but not everybody.

Frederica Freyberg:

What would you like to see?

Wayne Rider:

Helping the middle class more than anything.

Frederica Freyberg:

Because you don't think it does?

Wayne Rider:

Not enough.

Joe Peacock:

50% of the benefits of all the tax cuts during the Walker administration go to the top one-fifth of taxpayers. So they're not going to make a huge difference. But cumulatively the effect on the state budget is very dramatic.

Todd Berry:

I have watched us go through three, four, five economic cycles. We've never learned the lesson. We always end up either tax-cutting or spending our way into trouble.

Frederica Freyberg:

Berry says the jury is out on whether tax collections will pick up over the summer and into the fall, plumping the fiscal cushion. Meanwhile, the race for governor will be going full steam.

Scott Walker:

And taxes, taxes are going down.

Stephen Malpezzi:

It's human nature. It's not like a moral failing of politicians. It's human nature to say, I want to have some activities that really focus on this and that we're going to see an immediate payoff.

Frederica Freyberg:

This week, there has been a ratcheting up of the campaign flap over job numbers. Scott Walker announcing Wisconsin is third in the midwest for private sector job creation, while Mary Burke insists we're tenth out of ten among the states. Burke is using the quarterly census or "gold standard" numbers, while Walker is using monthly figures, something the governor had criticized as inaccurate if more timely in the past. 

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