Tony was the taxer, not Tommy

Bruce Murphy is one of the harder-working journalists in Wisconsin; sad to say, he does not have much competition.

But the former Milwaukee Magazine editor jumped the shark with his latest broadside, “Tommy the Taxer.” That’s a cruel twist on the pejorative by which Tony Earl, Thompson’s predecessor, became known. (It was Earl who infamously persuaded Walter Mondale to promise to raise taxes.) It does not apply to Tommy Thompson.

Murphy inundates the reader with a bushel load of statistics to make a seemingly plausible case. You can read him for yourself (bring a slide rule).

Let’s cut to the chase. Murphy makes two fundamental mistakes:

1) Murphy measures only state taxes. Yet most states, and especially Wisconsin, have a yin/yang relationship with local governments. State government can offload duties to localities and stick them with the bill. Therefore, a governor’s effect on taxes should measure the impact on both state and local taxes.

2) The author does not make use of tax burden, the surest way to measure the true impact of taxation. The concept of tax burden is probably the most useful because it correlates the amount of taxes to personal income – that is, the ability to pay.

Let’s go there first. When Tommy Thompson was elected governor in 1986, Wisconsin had the second-highest state and local tax burden in the U.S.

When Thompson left office in 2001, Wisconsin had fallen to seventh highest. This is the conclusion of the nationally respected Tax Foundation. By contrast, after almost eight years of Jim Doyle, the state had climbed back into fourth place (in 2009, the most recent year of the Tax Foundation’s analysis).

What was TGT’s impact on the average taxpayer? He merely lowered the average effective rate of taxes (state and local) paid by the average taxpayer (total taxes divided into income) from 12.1% to 10.5% – it has not been lower in 30+ years.

For a more nuanced view, check out what FactCheck.Org has to say about Tommy’s record on taxes and Obamacare.

Thompson, in fact, was the first governor to tackle the ever-escalating school property tax, driven by avaricious unions that blackmailed school boards with the threat of work slowdowns that were illegal but hard to stop. Previous increases in state aid went directly to the teachers unions, resulting in no local property tax relief.

Thompson took on the property tax burden by assuming two-thirds of the overall school tax – that is where Murphy’s increased state spending figures come from. But in return he drove a hard bargain: he limited the amount by which local governments could increase property taxes. Worse, from the teachers union’s standpoint, he imposed the qualified economic offer. As a result, property taxes across the state went down in 1999 for the first time in years. (The QEO was so hated that teachers union toady Jim Doyle eventually repealed it.)

Murphy references the removal of indexing the state income tax but doesn’t note that his predecessor, Tony Earl, was responsible. Thompson restored indexing, although one could argue that he could have done so sooner.

Let us also remember that Thompson, though governor for 14 years, enjoyed a Republican legislature for only 18 months, forcing him to use his veto pen a record 1,900 times to cut spending.

Even so, Tommy Thompson:

  • Cut taxes by $1.2 billion in 1999 through $339 million in permanent income tax rate cuts, additional property tax relief, and $700 million in sales tax rebate checks
  • Eliminated income taxes for the state's poorest families
  • Cut property taxes by $1.2 billion – the largest tax cut in state history – without raising other general taxes
  • Eliminated the inheritance tax and the gift tax
  • Gave a $3,000-per-child tax break for college tuition
  • Created the head-of-household income tax deduction
  • Increased the health care deduction for the self-employed to 100%
  • Eliminated the capital gains tax on the sale of home, farm, or business to one’s child
  • Made long-term care costs deductible

Some conservatives, it seems, also need to be reminded that Tommy Thompson was reviled by liberals for defining a more robust conservatism. Why couldn’t he be more like Warren Knowles and Lee Dreyfus, tsk-tsked Democrats and their apologists at The Capital Times. It is no accident that Dreyfus’ spokesman, Bill Kraus, now writes for Fighting Ed Garvey.

Tommy Thompson virtually invented welfare reform and school choice. Liberals have never made peace with either. That took guts, leadership, and faith in the people of Wisconsin.

Sign up for the free In Business Wisconsin Report – your weekly resource for local business news, analysis, voices, and the names you need to know. Click here.

Keep current with Blaska's other thoughts in the printed pages of In Business magazine. To subscribe to Dane County's premier monthly business magazine, click here.