Posts Tagged ‘Jobs’

Jobbed on Jobs

The job situation is proving to be such a campaign albatross for Wisconsin Democrats this fall that their candidate for governor is forced to make a big deal when a new firm in Milwaukee hires twenty people.

Twenty jobs? That’s almost two dozen!

The Wisconsin Democrats’ record on job creation is so bad, their state chairman puts out a press release praising President Obama for creating jobs…in Michigan.

Now, to give Mike Tate some credit, in that same press release he did boast that the trillion dollar stimulus package did create 63 jobs in Wisconsin.

Sixty three?  Wow, that’s like, much more than two dozen.

Poor Mike Tate. Sixty three jobs for billions of stimulus dollars spent in Wisconsin? Nice return on investment. But as they say, when your party’s economic policies give you lemons…

Ah, but the troubles don’t stop there. On the same day Wisconsin State Senator Julie Lassa holds a press event to bash her opponent, the hand-picked candidate to be the Democratic nominee to replace Dave Obey in Congress has to stare down new jobless figures in Wisconsin.

Wisconsin lost 1,000 more private sector jobs last month.

Again.

That has to be particularly stinging for Lassa, the Chairwoman for the poorly-named State Senate Committee on Economic Development.

It would be only a slight overstatement to say the major economic development success stories in Wisconsin the last few years have been for the printers of over-sized checks. Governor Doyle’s Department of Workforce Development has handed out more of these babies than Publisher’s Clearinghouse and the PGA combined. Trouble is, they always seem to be for ‘worker retraining’ after yet another manufacturing plant shutters its doors in Wisconsin.

The fact of the matter is Americans in general, and Wisconsinites in particular, have not seen a return on their investment in the failed economic policies of the last several years.  That fact comes as no surprise to anyone who understands how a dynamic, free market economy works.

We are already seeing political literature of incumbents crowing about their job-creation initiatives, but the unemployment numbers discredit their glossy, four-color claims.

No matter if you title legislation “The Recovery Act” or the “Jobs Act” or the “Don’t Read the Papers, Everything is Fine Act,” if you squeeze capital out of the private sector, if you unduly punish risk, if you constantly ridicule and attack job providers, you will stifle any hopes of economic growth.

As I write this in July 2010, we’re about to enter year three of learning that lesson.

In Wisconsin and across the country, Democrats are now poised to reap the discontent they’ve sown with their pro-meddling, pro-spending, pro taxing, anti-producer policies.

So while, Republicans may indeed be ready to win races across the nation, recent history indicates their time in power could be short-lived too. Frankly, if the GOP had been better stewards of tax money in the early 2000s they never would have lost their legislative majorities, both in Madison and Washington, DC.

The party that embraces a pro-growth agenda will gain and maintain electoral success for one reason: these policies will lead to job creation.

  1. Establish some certainty in the marketplace by unequivocally rejecting any proposed new tax increases.
  2. Cut spending. Cut programs. Not just stem the growth in spending. Cut government spending.
  3. Promote, encourage and reward risk by incentivizing investment (and not just in trendy feel-good amorphous ‘green jobs,’but ALL sectors of private employment).
  4. Control the cost of government by curbing projected health and retirement benefits for public employees.
  5. Permanently eliminate the double taxation of income. Tax a dollar earned, once; not again at time of the wage earners’ death.
  6. Eliminate the tax on capital gains.
  7. Enforce regulations that exist and you can quiet the calls for increased regulations.
  8. Quit bad-mouthing employers, risk takers and job providers. Rather, celebrate and encourage them.
  9. You don’t need 10 points because it’s a nice round number. Often, less government is better.

These are not radical or new proposals. But they beat what we’ve seen from our elected leaders recently.  If policy makers were to embrace a pro-jobs agenda similar to this, the economy would develop and return much more than 63 jobs per two billion dollar investment.

The best way to create jobs is to allow individuals who earn money to keep more of it. Investors will invest. Inventors will invent. Job providers will provide jobs.

And the big-check printers can drum up business elsewhere.

By Brian Fraley
 A MacIver Institute Perspective

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Posted in mi perspectives | July 16, 2010 | | 6 Comments

Case Made for Eliminating Vacant State Positions

Wisconsin’s Legislative Fiscal Bureau (LFB) released a projection of the state’s structural budget deficit last week and the view was ugly as far as the eye can see. Without any additional spending commitments, the state is facing a $2.5 billion hole to fill in the next biennial budget. In 2010-2011, the state will be spending $1.23 billion more than it collects, and will be short again $1.28 billion in 2011-2012.

This does not come at a time when government in Wisconsin is taking too little from us in taxes. The Wisconsin Taxpayers Alliance recently reported Wisconsin property taxes are now 4.5% of the state’s personal income, the highest level since 1996. Wisconsin taxpayers are being squeezed like lemons.

It’s not like we did not have any warning about the structural deficit. The state increased spending in the last budget by $3.6 billion. Making matters worse, Wisconsin used $2 billion of federal stimulus money on existing programs. With that money gone, the next governor and state legislature will need to get pretty creative to bring the budget into balance.

Legislators and Governor Jim Doyle knew that the increased spending and the one-time federal funds would only make problems worse in the long-term, but they decided to spend the money anyway. Rather than deal with the long-term structural issues affecting Wisconsin’s finances, they decided to go for the quick fix year after year.

Case in point: the number of positions being held vacant year after year to make each state budget “work” without addressing whether the positions are actually needed. Most people would be shocked to learn the state currently has 4,700 jobs that are vacant, especially as they don’t seem to be especially missed. So long as those positions remain on the books, they contribute to the state’s structural deficit because they’re considered an expense that will need to be paid for eventually.

Unfortunately, rather than ask why these positions continue to exist when nobody is missing them now, the politicians in Madison just hope for the day when an improved economy will generate enough tax revenue to pay the salaries and benefits for these government jobs. Meanwhile, the money for those positions is just reallocated to cover other expenses in government rather than used to fill them.

All across Wisconsin, employers are figuring out how to do more work with fewer employees. When they do, they don’t say, “When the economy is better, we’ll just stick somebody in those cubicles and add more payroll.” However, that seems to be the attitude of state government.

Milwaukee County Executive Scott Walker has proposed completely eliminating 4,000 positions that are currently vacant. Walker estimates it would result in saving $284 million per year, or $568 million per biennia.

To be fair, Walker’s opponents, Milwaukee Mayor Tom Barrett and former Cong. Mark Neumann have also announced plans to shrink the size of government. For some strange reason, though  neither thought much of the idea to eliminate bureaucrat positions that have been vacant for so long. Maybe we should just chalk it up to the fact that we are in the middle of the dog days of summer, a statewide campaign summer no less. How else can you explain opposition to such a common sense idea?

Of course, it isn’t hard to imagine the state employees’ unions are unhappy with Walker’s proposal. Marty Beil, Executive Director of AFSCME, also criticized Walker’s plan as a gimmick. Then he criticized Walker’s proposal for putting people out of work. Beil should talk to Barrett who would remind them that, since the positions were never filled, nobody is being put out of work. Perhaps Beil didn’t understand why Barrett was calling Walker’s plan a “gimmick” when Beil decided to echo Barrett.

Beil also criticized the Walker plan for placing the usual victims in danger. “Since he plans to exempt certain classes of employees from his axe, doesn’t this mean everybody else is going to be hit all the harder? Does this mean there will be fewer people to care for the mentally ill and developmentally disabled?”

Again, this misses the point. The positions considered by Walker for elimination are already vacant. None of these open positions are doing anything to care for the mentally ill and developmentally disabled because there is nobody currently filling them.

So for all of the double talk about how it’s a gimmick that will somehow cause the sky to fall, nobody has given a sound reason why these positions could not be eliminated. Wisconsin has somehow managed to survive without them getting filled prior to now, but their continued presence on the books only threatens to grow government more and make Wisconsin’s fiscal future that much more difficult.

By James Wigderson

Special Guest Perspective for MacIver Institute

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Posted in mi perspectives | July 13, 2010 | | 2 Comments

President Obama In Need Of Reality Check

Racine Town Hall with President Obama

President Obama has once again showed that he is in desperate need of a lesson in economic reality. I am referring to the latest instalment of ignoring economic reality by the President during his ‘town hall’ style speech, and question and answer session yesterday in Racine. The three main topics were economic stimulus, financial regulation and clean energy (with the President downplaying that the latter is mainly driven by his belief in catastrophic anthropogenic global warming). The underlying theme was that unregulated markets (aka Big Corporations) cause recessions, financial impropriety and environmental degradation and, thus, strong government action is needed.

At the base of the President’s fundamental economic beliefs appears to be the lack of a full awareness of the economic reality that wealth and prosperity are created by free people and free markets. This is the ‘fixed pie’ fallacy often believed on the Left. The key to the growth of wealth and prosperity for all Americans is entrepreneurial innovation and evolution. It is the minds of those who create new and better goods and services and ways of doing things for profit, subject to the pressures of competitors and consumers, that create and grow wealth and prosperity…not the poorly thought out actions of intrusive, self-righteousness, unaccountable, non-transparent and arrogant government. The President would do well to remember what the Founding Fathers intended government to do – ie to protect free people and markets from those who would initiate and inflict harm on other’s person and property…including from government itself!

Although he was certainly quite charming and likeable during his speech and the Q&A session, the President once again strongly highlighted his ongoing denial of economic reality and his embrace of economic mysticism.

The President’s original economic stimulus policies were aimed at creating between 3 and 4 million jobs by the end of 2010, and that unemployment would hit its high of 8% in 2009. Instead, unemployment peaked at 10.6% in January 2010 and only fell to 9.3% by May. The latest jobs and unemployment figures are scheduled to be released on July 2nd, and most economists are not optimistic. This pessimism, according to the Cato Institute, is mainly driven by businesses reluctance “to invest or hire because they’re concerned that the President’s Big Government agenda will mean higher taxes and more onerous regulation”. This is backed up by a recent National Public Radio poll which showed that only 37% of voters in Democrat controlled districts believed “President Obama’s economic policies helped avert an even worse crisis, and are laying the foundation for our eventual economic recovery” and as many as 57% believed “President Obama’s economic policies have run up a record federal deficit while failing to end the recession or slow the record pace of job losses”.

The President’s financial industry regulation is based on the flawed premise that the financial meltdown was caused by the greedy and misleading financial industry. Bad financial industry decisions and the like was largely the symptom not the cause of the financial meltdown. The Fed, government social engineering policies (eg Freddie Mac and Fannie May), and government over and poor regulation, was largely to blame. Of these, it is the Fed that is the real ‘elephant in the room’. The Fed is essentially a government mandated monopoly which essentially dictates the price of money (ie interest rates)…and, as central planners always do, they always get pricing wrong, with huge ramifications in the supply and demand of money throughout the entire economy! Like all central planners, the Fed suffers from the ‘we know what’s best for everybody else’ delusion. They don’t know what is best, nor could they (even in theory), as they will never have the proper information and incentives that decentralised consumers and competitive markets have. This line of thinking is backed up by great economists like Hayek, and by many recent studies by the Institute of Economic Affairs and the Ludwig von Mises Institute.

The government-driven clean energy revolution desired by the President, which uses Spain as its template, is based on wildly exaggerated expectations of the amount of jobs to be created and ignoring the predicted net job losses. As pointed out in a study last year by economics professor Gabriel Calzada of King Juan Carlos University in Madrid, “the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created.” These sorts of studies are, of course, not cited as part of the reason for resistance against this noble cause, instead the President alleged that clean energy has no powerful backers. A study sponsored last year by the Science and Public Policy Institute, entitled Climate Money, would suggest otherwise. This study, by only beginning to scratch the surface, showed that Federal Government expenditure alone in response to global warning alarmism was of the order of $79 billion…versus ‘Big Oil’ expenditure in support of global warming scepticism/realism of $23 million. It is very important to remember that the President’s push for clean energy is still largely driven by global warming alarmism, which is in turn driven by so-called science that continues to be shown, by the Heartland Institute and many others (citing such recent revelations as Amazon-gate, Climate-gate, Glacier-gate, and NASA-gate), to be at best wildly exaggerated and at worst fabricated. It is worth noting a typical self-contradiction of environmental policies reported last month by the Institute for Energy Research. They reported that “fossil fuel consumption and CO2 emissions are increased, not reduced, with the introduction of wind” and more specifically that “at wind penetrations of about 3% (as is the case in the Netherlands), the savings are zero, and at 5-6% (as for Colorado and Texas) the savings become negative, that is, emissions actually increase due to the presence of wind power”.

Let me remind the President of the major lever that the Executive, the Legislature and the Judiciary have of helping to improve the economic environment for economic growth – mainly through getting out of the way of free people and free markets, especially through seriously reducing government regulation like that recently passed in health, and that being attempted to be passed in finance and global warming (the latter including clean energy). A relatively easy way to start would be putting a freeze on further job-killing regulation (of any kind, be it stimulus, financial or global warming) and to start to get serious about subjecting any and all further regulation to proper, independent and transparent processes of benefit-cost analysis (BCA) centered around allocative and dynamic efficiency – which is by-and-far the best way to start to properly balance the often conflicting objectives of social justice, the environment and the economy. Perhaps the Government Audit Office could play some role in this, including in ex post as well as ex ante BCAs of regulations and regulators (eg the Fed, EPA, etc).

The President once again stated that we need to move forward not backward. Only embracing economic reality and letting go of economic mysticism can move us all forward. Of course, it will be the people of the greatest democracy in the world that will be the ultimate judge of all this come November and beyond!

By D. Brady Nelson
Special Guest Perspective for the MacIver Institute
D. Brady Nelson (d.brady.nelson@mac.com) is an Australian-American freelance economist with over 15 years experience in economic regulation and policy.
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Posted in mi perspectives | July 1, 2010 | | No Comments

State Cherry Picks Unemployment Numbers

MacIver News Service [Madison, Wisc...] The numbers don’t lie when it comes to Wisconsin’s unemployment situation, but they tell different stories depending on who is reporting the news.

Last  week the Wisconsin Department of Workforce Development, the Associated Press and the Milwaukee Journal Sentinel all had vastly different interpretations of May’s unemployment figures.

The State of Wisconsin emphasized 40,000 new jobs were created in May and the unemployment rate was 7.7%. Meanwhile the Journal Sentinel reported the state lost 7,900 jobs and the unemployment rate was 8.2%. The Associated Press asserted that 40,000 new jobs were created and there was an 8.2% unemployment rate.

The reports are different because the organizations were working with two distinct sets of numbers. When the state collects unemployment figures each month, it compiles the data by seasonally adjusted and not seasonally adjusted. Seasonally adjusted numbers take into account seasonal workers (like those who work in tourism or landscaping), while the unadjusted numbers show the total number workers in the state.

Economists prefer to work with the seasonally adjusted numbers, because they say it provides a truer picture of the economy. Those are the numbers the Journal Sentinel focused on in its story about May’s unemployment. The state focused on the not seasonally adjusted numbers, which painted a rosier picture of the state’s economy.

“The Doyle Administration’s spin on the recent jobs report masks a reality that’s all too clear to economists, employers and those underemployed or out of work. Government jobs and short-term stimulus work are no substitute for the private industry prosperity we desperately need to help Wisconsin families and businesses thrive long-term,”said Senator Alberta Darling, R-River Hills.

DWD does not always lead with the not seasonally adjusted numbers in its monthly press releases. Sometimes the seasonally adjusted numbers are more positive, and that’s what the state leads with.

In fact, May was the first month this year that DWD focused on the non-seasonally adjusted numbers. The last time DWD went with not seasonally adjust numbers was in December.

Both sets of numbers usually appear in the state’s press release, but the less appealing numbers are buried in the story.

When we take into account the seasonal adjustment, instead of adding 32,000 private sector jobs, the Wisconsin economy lost 7,900 private sector jobs in May. The net change from a year ago is a loss of 37,400 jobs in the private sector.

In seasonally adjusted terms, 3,700 jobs were lost in in the hospitality sector in May and 6,700 jobs were lost since last year. In non-adjusted numbers leisure and hospitality may have added jobs in the last month, but there is still a loss of 7,500 jobs since last year.

Overall, in May Wisconsin’s economy (both private and public sector) added 1,600 jobs in seasonally-adjusted terms, as opposed to the “tens of thousands” that the governor claimed.

The discrepancy has touched off a political tussle.

“Sadly, the Democrats here in Wisconsin made it clear they’re much more worried about their own jobs than the 100,000-plus jobs we’ve lost under their leadership,” said State Republican Party Chairman Reince Priebus. “They’re trying to pretend their actions don’t have consequences, and now they’re finding out that they can’t ‘spin’ the economy into recovery.”

An official with the Doyle Administration didn’t dispute the private sector job loss numbers, but did issue a statement chastising the reporting done on the matter.

“Several media outlets misrepresented state employment figures released yesterday by the Department of Workforce Development,” said Deputy Administration Secretary Dan Schooff on Friday. “The figures reported yesterday relating to state government employment and hiring used by the federal Department of Labor can be easily misconstrued. In the most recent report they indicated that the state hired 2,900 new employees (not seasonally adjusted). They also indicated that the state hired 3,100 new employees (seasonally adjusted), as was reported by several media outlets.”

The MacIver News graphic below shows the first sentence in the Department of Workforce Development’s monthly unemployment press releases for the last six months, which shows the Administration does not have a standardized way of reporting unemployment figures.

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Posted in News | June 21, 2010 | | 2 Comments

Beyond the Spin, State Employment Numbers Dismal

Next vacation, I’ll tour government offices…

I did my part for the Wisconsin economy. Last week the Lovely Doreen from Waukesha and I ventured to the Wisconsin Dells with our children, doing our part to pump dollars into the local economy. We took full advantage of the increase in the seasonal employment in Wisconsin as tourists. I even got a picture of myself wearing a funny Moose hat.

Seasonal employment is the key. Every May, Wisconsin adds jobs to ready itself for the summer tourism season, ramping up for construction, and other industries that require the warmer weather. Indeed, the numbers are out for May unemployment and in numbers not seasonally adjusted, leisure and hospitality added 10,700 new jobs last month.

With the release of the May unemployment numbers, the state announced a reduction in unemployment last month and the creation of 32,000 jobs, according to the unemployment figures not seasonally adjusted. The champagne corks were popping and the governor celebrated as the state’s unadjusted unemployment rate dropped 0.5%.

Governor Jim Doyle released the following statement:

“The tremendous drop in the May unemployment rate and the state’s addition of tens of thousands of jobs reflects our hard work to help communities across the state recover from the national economic crisis. I will continue to do everything possible to make sure that as this national economy turns around, Wisconsin is in a position to come roaring back.”

Unfortunately, every silver lining has a cloud attached to it.

When we take into account the seasonal adjustment, instead of adding 32,000 private sector jobs, the Wisconsin economy lost 7,900 private sector jobs in May. The net change from a year ago is a loss of 37,400 jobs in the private sector.

Even the hospitality industry is worse off. In seasonally adjusted terms, 3,700 jobs were lost in May and 6,700 jobs were lost since last year. Using the terms the governor would prefer, in non-adjusted numbers leisure and hospitality may have added jobs in the last month, but there is still a loss of 7,500 jobs since last year.

Overall, Wisconsin’s economy in May added 1,600 jobs in seasonally adjusted terms, not the “tens of thousands” that the governor claimed. 

According to the seasonally adjusted unemployment numbers, the number of government jobs in Wisconsin grew by 7,900. The net change in seasonally adjusted government jobs is plus 9,500. The other economic sectors that have seen any job growth in the last year are waste management and administrative services (5,500), educational services (3,100) and health care and social assistance (2,900).

State government alone added 3,100 jobs in the last month, although Department of Administration Deputy Secretary Dan Schooff says the numbers used by the federal Department of Labor “can be easily misconstrued.” Schooff says the actual number of state jobs increased only by 222 positions from April to May. 

The federal government added 3,800 jobs using seasonally adjusted figures, while the local governments added 1,000 jobs using seasonally adjusted figures.

Using figures not seasonally adjusted, government jobs went up 8,200. Of them, 4,100 were federal jobs, 2,900 jobs were at the state level, and 1,200 jobs were at the local level.

It is not known how many government jobs are the result of stimulus spending, nor was it clear how many of the jobs were census-related. However, the state’s relied upon over $3.4 billion in federal stimulus money to attempt to bring the state budget into balance last year (see the MacIver Institute’s $13 Billion of Bad). When that federal money goes away so will many of these government jobs. The alternative is higher state and local taxes, further hurting the private sector and reducing the number of private sector jobs.

Far from celebrating, Wisconsinites should be concerned about the continued wrong direction for the state’s employment figures. When we continue to have a net loss of private sector employment, and we add in a shaky funding foundation for future government expenditures, the result is likely to be more economic trouble and continued high unemployment.

That will continue regardless of how many funny hats I buy.

By James Wigderson
Special Guest Perspective for the MacIver Institute

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Posted in mi perspectives | June 21, 2010 | | 1 Comment

Wisconsin Borrows $1.4 Billion from Feds for Unemployment Funds

MacIver News Service [Madison, Wisc…] The State of Wisconsin has run out of money to pay unemployment benefits and has borrowed one point four billion dollars from the federal government to fill the gap.

Wisconsin’s loans place the state as one of the largest Unemployment Reserve debtors in the country.

As the economic climate worsened in Wisconsin the past few years, more and more people lost their jobs and the state’s Unemployment Reserve Fund became insolvent.

“We are coming out of the worst national economic times since the Great Depression,” said John Dipko, Wisconsin Department of Workforce Development Communications Director. “Unemployment insurance has been a critical lifeline for many workers who are out of work through no fault of their own.”

The Wisconsin DWD administers the state’s Unemployment Reserve Fund.

If the amounts in Wisconsin’s Unemployment Reserve account in the U.S. Treasury are not sufficient to cover anticipated unemployment payments, the state can borrow funds from the federal government.

Despite receiving $134 million in Stimulus funds, Wisconsin’s Unemployment Reserve Fund ended 2009 with a deficit of nearly one billion dollars.

DWD’s most recent forecast for the Fund, released in April, indicates that deficit is expected to double by the end of this year, leaving a closing balance of -$1,946,000,000.

“These benefits help these workers put food on the table, pay their electric bills, fuel their cars and cover other necessities while they search for work,” said Dipko.

The deficit numbers are staggering to critics of the Doyle Administration, who also chide the Governor and legislative Democrats for their poor record on job creation.

“These alarming figures should be another wake-up call for state government leaders to focus on improving Wisconsin’s business climate for permanent, high wage jobs, rather than creating temporary government make-work at taxpayer expense,” said State Senator Alberta Darling (R-River Hills), a member of the Legislature’s Joint Committee on Finance.

The federal loan could have been even more detrimental to the State; however, the federal government has waived the interest for all funds borrowed through the end of this year.

Normally, the interest rate charged on these funds either 10 percent or the average rate on specified federal securities. However, no interest is charged if a) the loan is made in the first nine months of a year b) the loan is repaid prior to October 1st of the same year and c) no additional loans are made before the end of that calendar year.

Future interest obligations, according to a memo from the Wisconsin’s Legislative Fiscal Bureau, are significant. Based on the projected deficits in the Reserve Fund, Wisconsin’s DWD has estimated the state would owe the feds $317 million dollars in interest by 2014 if it were to continue to borrow funds from the Treasury to cover the shortcomings in the state account.

According to the National Conference of State Legislatures’ analysis of statistics provided by the U.S. Department of Labor, more than 30 states have borrowed unemployment funds and Wisconsin’s total places the state in the top one third of borrowers.

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Posted in News | June 4, 2010 | | 9 Comments

Everyone, including owners and employees of Harley, pays when taxes are raised

With the news from Harley Davidson last week that they need to find $54 million in cuts to their costs, the debate renewed over just how bad Wisconsin’s taxes are for business. Attention is now focused on combined reporting, the corporate tax increase passed as part of the budget reconciliation bill and the last state budget. Of the $54 million, Harley Davidson is facing $22.5 million in increased taxes as a result of the new combined reporting requirement. 

Combined reporting requires corporations to combine income from all subsidiaries regardless of where they are located and lump it together with the corporate entity based in Wisconsin, with some allowance for the amount of actual business conducted in the state.  It is supposed to be more “fair” in that it prevents corporations from paying their subsidiaries based out of state for services in order to avoid paying Wisconsin taxes. Never mind that the Department of Revenue already had the power to go after companies that did such transfers with the sole purpose of avoiding Wisconsin taxes. 

Liberal special interest groups, such as the Institute for Wisconsin’s Future, might claim it was a matter of fairness, but they saw it as a way of increasing state revenue from the corporate income tax without raising taxes. They claimed it was merely closing a loophole that could be used to fund all sorts of state spending. 

That supposed “closing a loophole” raised corporate income taxes $1.2 billion, money that could have been better spent in the private sector creating jobs and retooling for the post-recession economy. That $1.2 billion is how much less competitive Wisconsin businesses are compared to businesses in other states.  

At the time combined reporting was passed, business groups warned of the consequences. The Coalition to Save Wisconsin Jobs, a group of manufacturing and service industry companies, prophetically said,  

Combined reporting creates a significant disincentive to invest in and grow Wisconsin business because it will inevitably lead to taxing income earned from entities without nexus in this state.  Taxing the significantly reduced income of employers will certainly do nothing to “stimulate” the economy; on the contrary it will make Wisconsin less economically attractive than it is at present. 

That is the burden Harley Davidson faces today. While Governor Jim Doyle may say combined reporting is not an issue for Harley Davidson, as he did on Friday, but the $22.5 million in combined reporting taxes is hitting their bottom line like a farm combine slices through a corn field. 

Wisconsin now faces the burden of doing what it can to prevent another large manufacturer from leaving the state. While Harley Davidson so far wishes to handle this as an internal cost-control issue, will the state find itself creating financial incentives to keep Harley Davidson from leaving? Would it not be easier than riding to the rescue of these companies and their employees to just have a business climate already in place that fosters the economic conditions for growth?  

If the goal is tax fairness, as the supporters of combined reporting claim, how is it fair that a company needs to be drowning under the Wisconsin tax burden before they can seek any sort of relief, and then it’s just more exceptions carved out the state tax code? 

Aha! The supporters of higher taxes will say. The state tax burden isn’t so bad according to them, and they point to a study released just prior to the close of the legislative session saying Wisconsin’s tax burden is about average, 24th overall.  

The problem with the study is that the numbers they are using are from 2006-2007, prior to the current budget in place, and even prior to the state budget fix passed last year, too. It’s from a time when Democrats were only in control of the Governor’s mansion and responsibility for the state’s tax policy was shared between the two parties. 

In the 2009-2010 biennium, under complete Democratic control, Wisconsin had one of the largest tax increases in the country (see here for a snapshot on the detrimental budgetary moves of the last two years). Only six other states had a higher percentage increase. That increase includes the new combined reporting tax burden on corporations. 

Defenders of the combined reporting requirement, like former Commerce Secretary Dick Leinenkugel, like to point out that Wisconsin is one of 23 states (out of 45 that tax corporate income) that now have a combined reporting requirement. We might not have been on the cutting edge of new taxes, but that hasn’t prevented Wisconsin business from bleeding. 

State Representative Leah Vukmir has called for a special session to put an end to the combined reporting requirement so Wisconsin businesses can once again be competitive and thrive. It would certainly beat the fire drill method of helping businesses in the state now. 

When the state legislature adjourned with many bills still on the agenda, one of them was recognition of Harley Davidson as the state’s official motorcycle. We’re lucky it didn’t pass, because it might have been a good-bye present to the company as they rolled production out of here. 

By James Wigderson
Special Guest Perspective for the MacIver Institute


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Posted in mi perspectives | May 3, 2010 | | 6 Comments

Wisconsin Jobs Losses Among Worst in the Nation

The Christian Science Monitor reports that Wisconsin had the 7th worst setback in terms of job losses in the nation over the last decade.  Their analysis of data from the Bureau of Labor Statistics shows that Wisconsin’s workforce today is as small as it was in March of 1995.

The current seasonally-adjusted unemployment rate in Wisconsin is 8.7 perent.

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Posted in News | March 11, 2010 | | No Comments

Debating Scott Walker’s Job Pledge

This week’s installment of “That’s Debatable,” is a discussion of Republican Gubernatorial candidate, Milwaukee County Executive Scott Walker’s pledge to see Wisconsin’s economy add 250,000 jobs in four years.

Each week, the website WisOpinion.com asks two veterans of Wisconsin policy and politics, Scot Ross of One Wisconsin Now and our own Brian Fraley (a Director at the John K. MacIver Institute for Public Policy) to engage in exchanges on a topic of their choosing.

From Fraley’s entry, this week:

Walker outlines his six keys to a better business climate: 1 – Lower Taxes; 2 – Less Regulations; 3 – End Frivolous Lawsuits; 4 – Better Education; 5 – Improve Healthcare; and 6 – Strong Infrastructure. Yes the devil is in the details, and it will be up to him and his campaign to follow through with the meat that needs to be put on those bones. Yet, even as it stands today Walker’s is more of a plan than the current administration’s, which is … um … well as soon as they have one I’m sure they’ll let us know. As for Walker’s record with dealing with the three budget problems of Milwaukee County employees, the Ament pension mess and the unions? Three more gold stars on his report card! 

You can read the entire exchange here.

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Posted in mi perspectives | March 1, 2010 | | 1 Comment

About all those green jobs…

Within the next five years, Wisconsin must double its use of energy from renewable sources to reach a level of 10 percent of all eelctrity sold in Wisconsin.

Right now, Wisconsin lawmakers are considering increasing that mandate to 25 percent by the year 2025. Supporters of the proposal say the required increase would create 15,000 jobs over the next 15 years. But where?

MacIver’s Bill Osmulski reports:

 

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Posted in News | February 19, 2010 | | No Comments
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