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Should Wisconsin eliminate its state income tax?

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From the pages of In Business magazine.

Welcome to "Political Posturing," featuring opposing views on current issues important to Wisconsin's business community. In this column, Wisconsin Business Alliance Board President Brad Werntz and conservative columnist David Blaska offer their opinions from the left and the right, respectively.

Sure, why not, and let’s trot out other bad ideas, too.

By Brad Werntz

Eight years into his tenure, Scott Walker still posts Tweets blaming our hardships on his predecessor. At this point, with whatever Walker proposes, it’s tempting just to say: “Why the hell not?” At some point, he’s going to have to own this mess. So sure, let’s just get rid of income taxes.

Currently, just seven U.S. states don’t assess income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Two other states — New Hampshire and Tennessee — only tax dividends and income from investments.

Yet, states still need to balance their budgets, so without income tax revenues most of these states charge higher-than-average sales and/or property taxes. Sales taxes make food, gasoline, and other key consumables more expensive, and contribute to higher-than-average living expenses in Florida, South Dakota, Washington, and New Hampshire.

Tennessee, a state which drafted a “no income tax” provision into its constitution in 2014, has the highest sales tax in the country with a statewide average of 9.45%. Likewise, New Hampshire has one of the nation’s highest effective property taxes. Washington has the fifth highest pump prices in the country because they charge 37.5 cents per gallon in gasoline taxes. The only reason Wyoming and Alaska can make up for lost income tax revenue is by charging hefty taxes on extraction industries such as oil drilling and coal mining.

Walker thinks that cutting out the income tax will help Wisconsin attract new businesses, create jobs, and spur an influx of talented workers, yet states with no income tax haven’t really created more jobs than others. Job growth consistently trails population growth in no-income-tax states. While miners may be on our state flag, mining as an industry contributes just 1% of our gross state product. Good luck taxing that.

Wait — maybe we can let a mining company draft the law that makes their earnings exempt from tax? Oh yeah: With Walker it’s been there, done that — and that didn’t work either. So why the hell not?

Brad Werntz is a small business owner in Madison.

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