State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.
The battle over the fiscal cliff is looming, and President Obama and Democrats are set on trying to solve our nation’s deficit problem by taxing the rich more and more.
There are two glaring problems with this approach. The first is that the rich described by Democrats include much more than the Warren Buffets of the country. It also includes many small business owners reporting their business income with personal income taxes.
Recent reports estimate there are roughly 941,000 high-income small businesses. These are not all Wall Street moguls and hedge fund managers. They are hardworking people that incurred risk and put their heart and soul into their business. For them, every dollar taken in taxes is less money to expand operations or hire a new employee.
If the President’s plan targets only the extremely wealthy, evidence suggests it would fail to boost government revenue. We can learn a lesson from Britain.
After the 2009-10 tax year, the British Government raised the tax rate on those making more than £1 million, about $1.6 million, from 40 percent to 50 percent. The move was expected to give a much-needed boost to government coffers. Instead, as was recently reported in The Telegraph, tax revenue from the top bracket dropped by £7 billion.
How did this happen? The answer, unsurprising to many conservatives, is that the dramatic tax increase caused those with money to flee. Britain had 16,000 people in its top tax bracket during 2009-10, and after the tax increase, that number dropped to 6,000 people.
While those of us at the state level do not have a vote regarding the upcoming fiscal cliff, we do have a state budget to balance. Last session we turned a $3 billion deficit into a projected surplus, while holding the line on tax increases. As a member of the Joint Committee on Finance, we must remember these lessons as we begin working on the next state budget.