Kevin Fischer is a veteran broadcaster, the recipient of over 150 major journalism awards from the Milwaukee Press Club, the Wisconsin Associated Press, the Northwest Broadcast News Association, the Wisconsin Bar Association, and others. He has been seen and heard on Milwaukee TV and radio stations for over three decades. A longtime aide to state Senate Republicans in the Wisconsin Legislature, Kevin can be seen offering his views on the news on the public affairs program, "InterCHANGE," on Milwaukee Public Television Channel 10, and heard filling in on Newstalk 1130 WISN. He lives with his wife, Jennifer, and their lovely young daughter, Kyla Audrey, in Franklin.
"My friends and I have been coddled long enough by a billionaire-friendly Congress," he argued. "It's time for our government to get serious about shared sacrifice."
Warren Buffett said that in 2001. One of many others to pile on that year was former Labor Secretary Robert Reich.
“The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich.”
Suggesting that we could wipe away our country’s monstrous fiscal woes with one gargantuan tax increase has some allure, especially for those on the left. Sounds appealing and downright fair. But the entire notion is laughable because it would always fail.
In 2012 a columnist for the Washington Post reported that a new paper by Third Way, a centrist Democratic group, looked at possible examples of taxing the wealthy as solutions to our out of whack economy. None of them came close to working.
“Under the first, entirely reasonable scenario, the Bush tax cuts for the wealthy (household income of more than $250,000) would expire, deductions for those with high incomes would be limited, the estate tax broadened, the capital gains tax increased by five percentage points, and the Buffett Rule adopted to ensure that those with incomes exceeding $1 million pay at least 30 percent. Here’s what happens: The national debt doubles as a share of the economy by 2035. The annual deficit in 2040 exceeds $4 trillion, adjusted for inflation.”
Well-known journalist/columnist John Stossel also wrote in 2012:
“If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit. Our national debt would continue to explode.”
When taxes for wealthy residents are increased they react with their feet by packing up and moving. With them go their wallets, their investments, charitable donations, and job creation capabilities.
The founder of the conservative think tank, the Heritage Foundation, Edwin Feulner asserts that almost half of Americans don’t pay income taxes. It makes sense that at the same time, about half of Americans feel the amount they pay in federal income taxes is about right. As Feulner wrote in a column years ago:
“If you’re paying nothing, that probably does seem like a good deal. Even if it isn’t either fair or sustainable. When government gives people cash and programs that cost more than they pay in taxes, most of them will favor ever bigger spending and more government. Who doesn’t love a ‘free lunch’? And, having had one today, who wouldn’t want one tomorrow, next month -- indeed, every day?”
There comes a time when wealthy taxpayers that are paying their fair share and beyond get fed up, concluding that enough’s enough. They exit to other state along with their ability to invest, create jobs, and contribute to worthwhile charities.
Back in 2009, Wisconsin was one of several states to raise taxes for their highest income tax brackets (including creating new tax brackets). BTW, who was our Governor back then?
Fast forward to today. Stateline reports some states are still considering soaking the rich:
A 2011 study of migration patterns across the 50 states from 2004 to 2009 concluded that millionaires tend to leave states with higher income taxes for states with relatively lower income taxes.
“When you raise your tax rate expecting a certain influx of tax revenue, what you get is less tax revenue than expected because people will respond to what you’ve done,” said Antony Davies, one of the study’s authors. In an extreme case, he said, states could raise tax rates and actually end up with less revenue, although the study did not specifically look at the impact of millionaires’ taxes on state revenues.
That’s important. And so is this:
But the study by Davies and John Pulito of the Mercatus Center at George Mason University also found that property tax rates have a much stronger effect on migration than income taxes.
Really? Is anybody (Franklin) listening?
Stateline also reports that there are differing views:
A study released in May by Michael Mazerov at the Center on Budget and Policy Priorities said job opportunities are the key driver of interstate moves. Other important considerations include cost of housing, physical and cultural environment and proximity to family and friends, the study said.
Mazerov pointed to North Carolina, which has among the highest income taxes of the Sun Belt states, yet saw a large number of people migrating in from other states.
“No state has ever lost revenue by raising taxes on rich people,” Mazerov said. “There might be a small amount of induced migration but we have very powerful research now from New Jersey and California and Montana showing that raising taxes on millionaires does not lead to a significant uptick in the number of people who leave. On balance, the states raise a lot of revenue.”
I’d rather not take the risk of jacking up taxes on the wealthy. The Wisconsin Taxpayer Alliance found the following:
During the five years prior to the 2000 census, almost 669,000 people either moved to or out of Wisconsin. However, the net in-migration into Wisconsin was a meager 7,282.
Individuals with college or advanced degrees were more likely to leave, while those with less education tended to come. Individuals with household incomes above $75,000 left Wisconsin. Those with incomes of $200,000 or more had the highest rates of leaving.
The huge exodus of wealthy Wisconsinites leaving the state caused a loss of an estimated $4.72 billion in net worth and a loss of $455 million in income over the five years of this study.
The trend continued between 2006 and 2010.
In short, the clear preference is to keep as many folks with deep pockets residing right here in Wisconsin.