Friday, August 28, 2015

Sorry MacIver, Wisconsin's tax cuts did not raise revenues

I want to give props to John Peterson at Democurmudgeon for tipping me off to this claim, which follows this week's release of slightly higher-than-projected revenues for the state of Wisconsin in Fiscal Year 2014-15. It's from the right-wing propagandists at the "MacIver Institute", and it's a statement begging to be examined.

The statement should immediately strike you as dishonest, as it implies that tax cuts are the reason for this higher amount of revenue, and leaves out the reality of higher populations and inflation, which should raise revenues regardless of economic conditions. In addition, the Obama Recovery continues to roll on with GDP up 3.7% in the final quarter of Wisconsin FY 2014-15, which also should help revenues. But MacIver's BS tweet is much, much more lame and WRONG than that.

First of all, Wisconsin's total revenues didn’t even reach the levels that the Walker Administration told the public it would last Fall. The final revenue figures for 2014-15 still fell over $100 million short of the $14.643 billion that Walker’s Department of Revenue estimated last November, and in particular, the Walker DOR was way high on income tax revenues (which are the main tax cuts MacIver is allegedly trying to credit), missing that number by over $174 million.

In fact, the only number the final 2014-15 revenues beat were the even-lower estimates that the Legislative Fiscal Bureau sent out in January, and the LFB was still closer to the final numbers than the Walker’s DOR was ($71 million low vs $102 million high). But it is two previous LFB budget estimates from 2014 that illustrate just what a failure these tax cuts have been when it comes to raising revenue, and how they fell far short of the numbers that we were on track to have.

Let’s go back to January 2014, which featured the rosy LFB revenue picture that led the WisGOP Legislature and Gov Walker to put in a second round of Koo-Koo tax cuts before the 2014 elections. At the time, there was a projected surplus for the end of Fiscal Year 2014-15 of over $1 billion, with healthy revenue growth projected for both fiscal years of the 2013-15 budget.

January 2014 revenue projections
2012-13 actual $14,085.6 million
2013-14 $14,399.9 million (+2.23%)
2014-15 $15,017.2 million (+4.29%)

Then after the tax cuts and other measures were taken at the end of the 2013-15 biennial legislative session, the LFB returned in May to run the numbers again. At that time, revenues were projected to decrease compared to the January estimates (by $170 mil in year 1 and $292 million in year 2), but still anticipated to grow from the previous fiscal years.

May 2014 revenue projections
2012-13 actual $14,085.6 million
2013-14 $14,229.3 million (+1.02%)
2014-15 $14,725.0 million (+3.48%)

But that didn’t happen either. 2013-14 revenues ended up DECLINING to $13,948.1 million (-0.97%), and while the recently completed 2014-15 Fiscal Year had a nice bounce-back to $14,541.2 million (+4.25%), that figure is still $476 million below the projections that were under the status quo of January 2014, and nearly $184 million below the May 2014 projections.

So no, MacIver, the 2013 and 2014 Koo-Koo tax cuts did not come close to paying for themselves, and they cost the state nearly half a billion dollars in revenue compared to the projections that were out in January 2014. And as I mentioned earlier this week, Wisconsin’s 2014-15 revenue growth figures for income and corporate taxes are far below the U.S. rates of revenue growth in both of those areas, which shows that the higher revenues in Wisconsin have nothing to do with the state’s fiscal policies (if anything, it could be argued that they’re causing the state to lag), and a whole lot to do with “THANKS OBAMA!”

So what did Wisconsin get for those tax cuts in 2014? 6th out of 7 Midwest states for job growth, and 38th in the nation. This put the state in a major hole for the 2015-17 budget, which resulted in crippling measures such as the $250 million cut to the UW System, further limitations to K-12 education that are helping lead to teaching shortages throughout the state, and borrowing up to $850 million for Transportation.

Do I think the Bradley Foundation's propagandists at MacIver will ever admit these facts? HAH!

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