Conservatively Speaking

Wisconsin economic performance near the bottom

Posted by Mary Lazich on June 14, 2010

Economy, State budget, Business

When a new economic report is issued about Wisconsin, you can bet the news will be gloomy.

The American Legislative Exchange Council (ALEC) has released its 2010 edition of “Rich States, Poor States” that ranks all 50 states on their economic policies and performance, and also forecasts the states best equipped to rebound from the rough economy. ALEC bases the economic performance rankings of the states on three factors: personal income per capita cumulative growth from 1998-2008, domestic migration from 1999-2008, and non-farm payroll employment from 1998-2008.

Wisconsin has the seventh worst economic performance ranking, #44 (1=best 50=worst). Last year, Wisconsin’s economic performance ranking was #41.

From the ALEC report:

“To give you a more in-depth look at which states are asking more from taxpayers—and in the process making their states less competitive— we have put together our very own top 10 list of biggest state losers for 2010. Wisconsin:  Raised its income tax rate to 7.75% on incomes above $225,000 and also increased cigarette taxes.”

Wisconsin’s property tax burden is the tenth worst in the nation.

Co-author of the report and highly-regarded economist Dr. Arthur B. Laffer said in an ALEC press release, “Tax and economic policies are essential to the competiveness of our states. Most actions being taken in state capitals today—and practically all actions from Washington, D.C. today—are flat-out wrong.”  

“The tax-and-spend attitude in Washington, D.C. is making the problem far worse for states,” co-author Stephen Moore said. “Once the federal stimulus dollars dry up, only federal requirements will remain—and states will be left with bloated programs they are no longer able to afford.”

According to the release, the authors “found that states with a high and rising tax burden are more likely to drive away individuals and business, while those with lower and falling tax burdens are more likely to attract businesses and create jobs.”

The solution for the states: Reasonable spending limits. The report says, “If states would have simply allowed their spending to grow at the rate of population plus inflation (PPI) growth, they would (almost without exception) be sitting on budget surpluses instead of facing deficits.”

Some states have actually cut taxes. Vermont lowered its income tax rate, North Dakota reduced personal income tax rates and property taxes, and Louisiana adjusted its tax brackets. The ALEC report calls efforts to provide tax relief “a silver lining” amidst all the gloom and doom.

ALEC concludes that Washington has actually done more harm than good to states:

“Washington would be wise to end all federal aid for states, because the money that Washington spends has to come from states—it is far from being free. Instead state lawmakers should ask Congress to focus on broad economic growth policies that will put states back in the black. This should include low, flat-rate taxes, government spending restraint, sound and stable money, free trade, and minimal regulation. State fiscal policies have a profound impact on their relative economic performance. Governors and state legislators would be wise to tell Washington next time it offers bailout dollars: ‘Thanks, but no thanks’.”

Here is the ALEC report and the ALEC press release.