MacIver News Service
By M.D. Kittle and Ola Lisowski
MADISON – Tony Evers wants more money for government – a lot more.
The secretary of the state Department of Public Instruction and Democrat candidate for governor proposes a big infusion of new revenue for everything from education to transportation.
Just how Evers plans to fund it all remains a bit murky, but one thing is certain: Somebody would have to pay for the candidate’s government expansion plans.
During his annual State of Education Address at the Capitol Thursday, the public education chief laid out his plan to increase education spending by $1.4 billion in the next biennial budget, which would follow Republican Gov. Scott Walker’s historic investment in K-12 education, which boosted spending by $639 million in the current two-year budget.
Afterward Evers took – and seemed reluctant to answer – a flurry of questions from Capitol reporters, including MacIver Institute’s Ola Lisowski. How would Evers pay for it all?
Yet to be determined, according to the candidate.
“There’s no definite plans at this time,” Evers said. He went on to insist, “Anything is on the table.”
Based on his public statements, anything could include a hefty gas tax. He’s open to 33 cents a gallon, but Evers shrugged off claims by Walker’s campaign that the Democrat would hike the state’s gas tax by as much as a buck a gallon.
The Walker campaign ad asserts Evers would raise various taxes. Evers again didn’t disabuse anyone of that notion during Thursday’s press gaggle.
Evers said he is considering a broad range of possible tax hikes, “shifts,” and “revenue enhancements” to pay for transportation.
Property taxpayers could be looking at higher bills for the first time in several years under Evers’ latest education budget proposal, which includes a 10 percent spending increase. That would be on top of the $636 million in additional ed spending Walker built into the state’s current two-year budget.
DPI documents, as well as the agency’s spokesman, maintain that property tax bills would not be impacted. Yet with all the increased spending and a crucial property tax control removed, that seems a stretch. Budget watchers say the loss of the state tax credit would be a big hit to homeowners in many communities, a loss that would not be offset by Evers’ funding formula ideas.
Evers said Walker’s priorities are “out of whack.”
The Republican governor on Friday remarked on how the times had changed.
“Last year when I made the largest actual dollar investment in state history he called it ‘pro-kid.’ Now he’s saying it’s out of whack,” Walker told MacIver News Service at an event in Milwaukee. “The fact is when he was running for superintendent he thought it was a pro-kid budget. When he’s running for governor he thinks it’s something different. This is just double talk from a politician.”
Evers did call Walker’s 2017-19 spending plan a “kid-friendly” budget at the time the Legislature was working through the document. He has since criticized the governor and the Republican-controlled Legislature for not spending enough on education. At more than $11.5 billion over two years, the 2017-19 K-12 budget represents the largest state education investment in actual dollars ever.
Evers has offered few details on where exactly he would find the additional $1.4 billion needed to fund the proposed spending increase. At Thursday’s press conference, he repeatedly denied the notion that taxes must necessarily go up.
While he insists his goal is to “keep taxes reasonable,” Evers is drawing from the old redistributionist handbook. In short, higher taxes for higher earners in the pursuit of lifting the tax burden off of Wisconsin’s middle class, Evers insists.
But what Evers leaves out in his class warfare rhetoric is the number of small business owners that would be hit by higher income taxes. So-called “pass-through” businesses are taxed at the individual tax rate, not at the corporate rate.
“Again, small business people and small farmers in this state hardly make enough money to be considered wealthy and to be in any kind of a major tax bracket,” Evers told reporters Thursday. “We have to prioritize our taxation policies so that we benefit the small business owners and the people of Wisconsin that are hard-working and can barely just get by.”
If small businesses are a priority, higher income taxes on pass-throughs would seem a contradiction.
The Tax Foundation notes that these sole proprietorships, S corporations, and partnerships make up the vast majority of businesses in the United States and more than 60 percent of net business income. Pass-through businesses account for more than half of the private sector workforce.
Evers dismissed a question about the potential negative impact his tax ideas could have on small businesses, manufacturers and farmers. On the candidate’s “table” of revenue ideas is doing away with the manufacturing and agriculture tax credit. The credit offers a significant share of state income taxes for operators of factories and farms.
Democrats charge the tax credit, which delivered some $260 million in tax relief for critical Wisconsin industries in 2017, is nothing more than “corporate welfare.”
A study by the University of Wisconsin-Madison’s Center for Research on the Wisconsin Economy found more than 42,000 jobs were created between 2013 and 2016 thanks to the Manufacturing and Agriculture Credit. More than 88 percent of tax credit recipients were small businesses, with incomes less than $1 million.
Scott Manley, senior vice president of Government Affairs for Wisconsin Manufacturers & Commerce, said raising taxes and eliminating job-creating tax credits is a “recipe for economic disaster and failure.”
“It would be difficult to design a better blueprint to ruin Wisconsin’s economy than what Tony Evers is proposing right now,” Manley said.
Bill Osmulski contributed to this report.
M.D. Kittle is an Investigative Reporter with the MacIver Institute.
Ola Lisowski is a Research Associate at the MacIver Institute who focuses on education and tax policy.
This appears courtesy of the MacIver Institute.