Current Events        vs.       Founding Documents

Entry 113

Current Event

According to Madison.com Posted: Friday, October 21, 2011

Wisconsin’s controversial voter identification law violates the state constitution by creating a new class of ineligible voters, according to a lawsuit filed Thursday in Dane County Circuit Court.

Unlike lawsuits in other states challenging similar voter ID laws, the lawsuit filed by the League of Women Voters of Wisconsin focused on the law’s compliance with the state constitution instead of the U.S. Constitution, attorney Lester Pines said.

“The Wisconsin Constitution only allows the legislature to exclude … two named classes from voting — felons and people ruled incompetent,” Pines said in a statement. “The new law creates a third class of citizens who may not vote — people who do not have ID.”

The lawsuit relies on an unusual legal argument that the Legislature can only enact laws that are enumerated in the state constitution, said Barry Burden, a UW-Madison political science professor and expert on elections. The U.S. Constitution includes an “elastic clause” that allows Congress to pass such laws, but Wisconsin’s does not.

“It could have implications on other policy areas,” Burden said.

In addition to allowing felons and those deemed incompetent to be barred from voting, the state constitution allows for voting laws that define residency, provide for voter registration and absentee voting, and extend voting rights to certain groups with voter approval.

In 2008, the U.S. Supreme Court ruled an Indiana photo ID law didn’t violate the U.S. Constitution. In a separate suit brought by the League of Women Voters of Indianapolis, the Indiana Supreme Court ruled the law did not violate the state’s constitution.

According to the lawsuit from the League Of Women Voters:

“ Act 23(Wisconsin photo ID law)  imposes an additional and unlawful qualification to vote unremunerated in article III, section 1 and thereby prohibited by article III, section 2 of the Wisconsin constitution.”

VS

The League of Women Voters vs. The Wisconsin State Constitution

Founding Document

Wisconsin State Constitution

ARTICLE III.  SUFFRAGE.

SECTION 1. [Electors.] Every United States citizen age 18 or older who is a resident of an election district in this state is a qualified elector of that district.

SECTION 2. [Implementation.] Laws may be enacted:

(1) Defining residency.

(2) Providing for registration of electors.

(3) Providing for absentee voting.

(4) Excluding from the right of suffrage persons:

(a) Convicted of a felony, unless restored to civil rights.

(b) Adjudged by a court to be incompetent or partially incompetent, unless the    judgment specifies that the person is capable of understanding the objective of the elective process or the judgment is set aside.

(5) Subject to ratification by the people at a general election, extending the right ofsuffrage to additional classes.

SECTION 3. [Secret ballot.] All votes shall be by secret ballot.

We the People:

Requiring more-credible proof of existing qualifications (US citizenship and residency in an election district in this state) is not an additional qualification.  This is a weak and desperate delay tactic.

I commend the Wisconsin’s State Legislators who wrote the strong photo ID legislation.  However to adequately protect legitimate voters from disenfranchisement by fraud, we need comprehensive reform.

Current Events        vs.       Founding Documents

Entry 106

Current Event

According to the Milwaukee Journal-Sentinel, May 5, 2011

Governor Scott Walker signed into law Thursday a measure that voids Milwaukee’s paid sick leave ordinance that was passed by voters in a referendum and upheld recently by the state Court of Appeals.

Walker, in Milwaukee on Thursday for the annual Governor’s Prayer Breakfast at the Italian Community Center, went to offices of the Metropolitan Milwaukee Association of Commerce offices to sign Senate Bill 23. The bill will preempt local ordinances from requiring businesses to provide paid sick leave to employees for family, medical or health issues.

“This law removes another barrier in the road to creating 250,000 private sector jobs by 2015,” Walker said. “Patchwork government mandates stifle job creation and economic opportunity. This law gives employers the flexibility they need to put people back to work and that makes Wisconsin a more attractive place to do business.”

MMAC had challenged the paid sick leave law in the courts and pushed for the legislation to nullify the local ordinance from going into effect, saying it would be a job killer and bad for Milwaukee’s economic development.

In reaction to the signing, Dana Schultz, of 9 to 5, National Association of Working Women, the group that led a coalition to pass the paid sick days law, said in a statement: “The override of the Milwaukee sick days law is an assault on democracy, local control and working families.”

VS

State vs. Local Government

Founding Document

Wisconsin State Constitution, Article XI (excerpt) SECTION 3.

(1) Cities and villages organized pursuant to state law may determine their local affairs and government, subject only to this constitution and to such enactments of the legislature of statewide concern as with uniformity shall affect every city or every village. The method of such determination shall be prescribed by the legislature.

We the People:

Here is another example of the substantial control reserved to the state level of government.  Other states may choose differently, but this bill complies with the Wisconsin Constitution because it affects every city and village therein.

Current Events        vs.       Founding Documents

Entry 87

Current Event

According to the Milwaukee Journal Sentinel on April 16, 2010 (full article available on-line)

A Wisconsin federal judge on Thursday found the National Day of Prayer unconstitutional, saying it violates the First Amendment prohibition against laws respecting an establishment of religion.

The decision by U.S. District Judge Barbara B. Crabb of the Western District of Wisconsin was a victory for the Madison-based Freedom From Religion Foundation.

The group had sued the Bush and later Obama administrations in an effort to block the presidents from making their annual proclamations inviting Americans to set aside a day for prayer or meditation.

…

The decision is not expected to affect this year’s presidential proclamation, scheduled for May 6, because Crabb postponed enforcement of the decision until all appeals are exhausted.

The U.S. Department of Justice said it was reviewing Crabb’s ruling before deciding on a next step. The White House said President Barack Obama would make his 2010 proclamation as planned.

“We have reviewed the court’s decision and it does not prevent the president from issuing a proclamation,” spokesman Matthew Lehrich said in an e-mail to the Journal Sentinel.

In her ruling, Crabb acknowledged the deep divide over the role of religion in America and the complex and often contradictory jurisprudence on the separation of church and state.

She said the federal statute ordering the president to make the annual proclamation serves no secular purpose, casts nonbelievers as outsiders and goes beyond the mere acknowledgment of religion to encouraging a practice best left to individual conscience.

….

Crabb’s decision drew a mixed response from Milwaukee faith leaders.

Milwaukee Archbishop Jerome Listecki, who has spoken out against what he calls the “religion of secularism,” called it a “missed opportunity to acknowledge our nation’s identity, which was founded on our dependence on God.”

But others said they supported the ruling as a protection of the separation of church and state.

“I find it both troubling and dangerous that so many zealous believers in any religion want to legislate their particular understanding of faith and God for everyone else,” said the Rev. Dr. Janis J. Kinens of Advent Lutheran Church in Cedarburg.

“We don’t need to look far to see the horrific and devastating results of a theocracy form of government,” he said.

VS

A Federal Judge vs. The Constitution

Founding Document

US Constitution, First Amendment:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

We the People:

A president acknowledging prayer as a positive influence hardly establishes a national religion.  Judge Crabb and Reverend Kinens are either embarrassingly uninformed about the Constitution or operating with hidden motives.  If enough people request action from their legislators, judicial impeachment is always an option.

This commentary was authored by Mr. Mark Musselman, Commentary Associate. He can be reached at Commentary.Associate4@PaxAmericanaInstitute.org.

Current Events        vs.       Founding Documents

Entry 86

Current Event

According to Wall Street Journal/AP June 17, 2010

The Senate is moving closer to passing legislation that would require states to grant public-safety employees, including police, firefighters and emergency medical workers, the right to collectively bargain over hours and wages.

The bill, known as the Public Safety Employer-Employee Cooperation Act, would mainly affect about 20 states that don’t grant collective-bargaining rights statewide for public-safety workers or that prohibit such bargaining. State and municipal associations, as well as business groups, oppose it, saying it will lead to higher labor costs and taxes, at a time of budget deficits.

The bill, backed by at least six Republicans in the Senate, prohibits strikes and leaves to states’ discretion whether to engage in collective bargaining in several areas, including health benefits and pensions.

If the legislation passes and states choose not to grant the minimum collective-bargaining rights outlined in the bill, the Federal Labor Relations Authority, which oversees labor-management relations for federal employees, would step in and implement collective-bargaining rights for these workers.

……

More public-sector workers belonged to a union than private-sector workers last year for the first time ever. The Senate bill was originally introduced in the current Congress by Sen. Judd Gregg (R., N.H.) and the late Sen. Edward Kennedy (D., Mass). In May, Senate Majority Leader Harry Reid (D., Nev.) tried to attach the bill to a $59 billion supplemental disaster-relief and war-spending bill that ultimately passed. Jim Manley, a spokesman for Mr. Reid, said that effort failed because of procedural reasons. “It’s a possibility…in the next couple of weeks,” it could advance as a freestanding bill or an amendment to another bill, he said.

“If states and localities have chosen not to go in the direction of collective bargaining, that should be their right to do so,” said Neil Bomberg, a lobbyist for the National League of Cities. Currently, 15 states don’t grant collective-bargaining rights to public-safety workers on a statewide basis, two states, Virginia and North Carolina, prohibit such workers from bargaining, and four states allow collective bargaining for firefighters but not for police.

………

VS

State vs. Federal Authority

Founding Document

US Constitution, Tenth Amendment –

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

We the People:

Federal interference in labor commenced long before the collective the bargaining privileges issue boiled over in Wisconsin.  Such attempts exceed the Constitutional authority of federal officials and override state’s prerogatives.  When government unions finance our lawmakers’ campaigns and operate as a voting block, an obvious conflict of interest appears.  When lawmakers know we vote based on the tenth amendment, the problem will be resolved.

Poll Results:

• I like it. The unions need to be reined in (78%)
• Something needs to be done with the unions, but this is a little harsh (3%)
• Hate it. These are dedicated public servants (19%)

Vote here or read more: http://bit.ly/efsAJQ

Economic Woes.  For Wisconsin to return to a sound fiscal footing, Governor Walker’s budget must articulate a bold plan for combating the myriad of economic menaces currently crippling the Badger State.  At the time of this writing, the state unemployment rate stands at 7.5 percent. 

There is both good and bad news here.  Wisconsin’s unemployment rate is significantly lower than other Midwestern states, especially neighbors Michigan and Illinois, which are still struggling with unemployment rates of 11.7 percent and 9.3 percent respectively.  Wisconsin’s total unemployment rate decreased last month by 0.1 percent despite a loss of 20,200 jobs due mostly to the nature of part-time, seasonal employment.  Overall, growth has been real, if slow: Wisconsin has added 31,600 private sector jobs since December 2009.

But the improvement in the economic situation is encouraging, and more work needs to be done to restore economic prosperity.  In addition to what is still a high unemployment rate, the state faces a $258 million structural deficit for fiscal year 2011-2012 and a $2.2 billion total budget deficit over two years.  If the state government fails to take action, the structural deficit will probably climb to a whopping $3.2 billion by 2013.

Medicaid.  Unlike Social Security and Medicare, each of which is administered nationally, each state is individually responsible for administering its own Medicaid programs.  Wisconsin faces a major problem with unfunded Medicaid liability.  At the time of this writing, the state’s Medicare deficit will be between $150 and $174 million for fiscal year 2011-2012.  More worrying, explains the Wisconsin State Journal, is that “Medicaid programs, which cover about 1.1 million [people] in Wisconsin, faces [sic] a deficit of more than $150 million in this fiscal year, and about $1.8 billion by 2013.”  In order to overcome our annual budgetary shortfalls and the looming $2.2 billion two-year deficit, Governor Walker must lead drastic alterations to Medicaid because it clearly constitutes a tremendous fraction of the imminent budget problem.

State Employee Pensions and Benefits.  State employee benefits and pensions are among the greatest dollar drains facing the state in the years ahead.  Currently, Wisconsin state employees do not contribute anything to their pensions and pay only between four percent and six percent of their health insurance costs.

Governor Walker has suggested that state employees “should be forced to make a five percent contribution to their pensions and increase their share of health insurance costs up to 12 percent.”  Governor Walker contended in his speech that this proposal, which would still not force state employees to pay as much as most Americans do for these benefits, would save the state more than $30 million over only three months.  Walker explained that, at present, Wisconsin taxpayers pay more than $190 million each year on employee benefits.  Forcing state employees to pay a portion of their health benefits and contribute to their pensions like everyone else does would go a long way toward restoring the state’s fiscal foundation and would directly save Wisconsin taxpayers millions of dollars.

Conclusion.  Restoring Wisconsin to a sound fiscal footing and creating jobs will require bipartisan cooperation and sound policy initiatives.  Governor Walker and members of the state legislature will have to make drastic cuts to Medicaid and state employee benefits, and they plan to simultaneously reduce taxes and provide businesses with the incentives necessary to create jobs.  Failure to solve the state’s economic woes could ultimately lead to an increased budget deficit, a higher unemployment rate, and a longer aftermath to economic recession, but the ideas described above can do much to repair the existing damage and prevent foreseeable future problems.

This special report was authored by PAI’s Deputy Policy Director.

The only legislation allowed to be proposed, discussed, and enacted during the special session is that which relates to spending, taxes, job creation, and balancing the state budget.  The two greatest obstacles plaguing the Walker policy agenda in the upcoming legislative session are the $2.2 billion budget deficit and an unemployment rate of 7.6 percent.  Leaders from both major parties recognize the challenges facing the Badger state and are committed to putting their partisan differences aside in order to restore economic prosperity.

At the time of this writing, legislative leaders have worked together to draft a myriad of legislative initiatives that create jobs and restore economic prosperity.  Two of those initiatives include tax cuts for small businesses and individuals, as well as increased funding for local economic development.  With the state of Wisconsin mired in an economic recession and thousands of citizens out of work it is paramount that legislative leaders put their partisan differences aside and work to return the state to a sound fiscal footing.

Tax cuts for individuals and small businesses.  Governor Walker and state legislative leaders from both major parties reached an agreement this past week on a plan that would cut taxes for small businesses (those whose annual income is less than $500,000 in gross receipts) and every Wisconsin resident.  Scott Bauer of the Associated Press noted that Walker had to diverge from his initial plan of providing tax relief to businesses with fewer than 50 employees because, in Wisconsin, businesses are taxed based on annual income and gross receipts, not total employees.  Governor Walker’s initial proposal was estimated to cost $40 million annually; the annual cost of the new tax cut program, however, has yet to be released by the Wisconsin Department of Revenue.

Though short on specifics, the tax cut legislation was approved unanimously by the Senate Finance Committee.  Despite facing liberal opposition in the Assembly Jobs, Economy, and Small Business Committee, the legislation was sent to both houses of the legislature for final approval.  Liberals in the legislature were supportive of some of Governor Walker’s tax cut proposals but hesitant to support the small business tax credit until more information is made available.  Still, legislative leaders on both sides of the political aisle are in agreement that tax cuts for small businesses are the most viable solution for creating jobs and restoring economic prosperity.  The Walker administration has yet to release the specifics of its tax cut plan for individuals and families, but the plan is likely to “send a message of change, reducing the tax burden in Wisconsin, lessening regulation and reducing the costs from litigation.”

Increased funding for local economic development.  In addition to tax cuts for small businesses and individuals, legislative leaders from both parties supported a legislative initiative last week that would significantly increase funding for economic and rural development.  With the vast majority of Wisconsin municipalities and counties facing enormous budgetary shortfalls, and since the national economic climate has been challenging, business development has been moribund for the past two years.   Thus, the Walker administration has worked in conjunction with county and municipal officials to build an economic development package that assists local governments in luring major corporations into their communities.

Under this legislation, credits for local economic development will be increased by $25 million annually.  This legislation, much like the tax cuts for small businesses and individuals, was passed unanimously by several State Senate committees, including the Committee on Economic Development and Veterans and Military Affairs.  Conversely, several leading Democrats on the Assembly Jobs, Economy and Small Business and the Rural Development and Rural Affairs Committees opposed this legislation.

While state aid is important for economic development, county and municipal governments should reduce the property tax burden and design tax breaks and financial incentives for local businesses.  Several Wisconsin counties have already taken steps to increase business growth in their communities.  In Outagamie County, for example, former State Treasurer and County Executive candidate Jack Voight is working with business leaders, economics experts, and political analysts to create a Fox Cities Business Leading Authority, whose sole function will be to create jobs and attract business to Outagamie County.  This Authority, a public-private partnership, would provide local businesses with the capital necessary to create jobs and expand their base of operations.  Governor Walker has pledged to work with leaders from each of Wisconsin’s 72 counties on developing sound business development strategies in localities across the state.

Controversial elements of the Walker agenda.  Despite the unprecedented display of bipartisanship that has been embraced thus far in the capital during the special session, liberals are committed to opposing certain provisions.  Among the panoply of initiatives introduced in the legislative special session, two have drawn the fiercest criticism: the restructuring of the Department of Commerce and the elimination of income taxes on Health Savings Accounts.

According to Bauer, the plan for restructuring the Department of Commerce involves “[replacing] the state agency with a public-private hybrid composed not of unionized state employees but of private workers.  It would be run by a 12-member board appointed by the governor.”  Liberals hotly oppose this.  Representative Gary Hebl, (D-Sun Prairie) said of Governor Walker’s decision to appoint members to this new hybrid committee, “It is almost like a dictatorship, or total control by a king.  It’s way beyond what our democracy calls for.”

Governor Walker points out, however, that the Department of Commerce in its current form is unable to carry out its foremost objective: creating jobs and attracting businesses to Wisconsin.  Instead, the Department of Commerce has become wasteful and intrusive: for example, it has recently taken over the regulation of amusement park rides and elevators to petroleum tanks.  Fundamentally, though, the melee over this bill is purely ideological.  Conservatives want to lessen the size and influence of the state bureaucracy, whereas liberals want to increase government oversight and protect unionized employees.  Despite their opposition, liberals do not have the votes necessary to prevent the restructuring of the Wisconsin Department of Commerce. 

The second major issue that has drawn unanimous liberal opposition in the special legislative session is the elimination of income taxes on Health Savings Accounts.  Rather than eliminating taxes on Health Savings Accounts, liberals contend that BadgerCare should be extended to all Wisconsinites who are currently without health insurance.  In general, liberals in the legislature fervently oppose the implementation of any health care legislation that does not increase government oversight.

But this legislation not only reduces income taxes for those who currently possess Health Savings Accounts; it also provides citizens with monetary incentives if they agree to establish new ones.  These allow individual citizens to control their own personal well-being and livelihood.  Furthermore, they create a culture of ownership by keeping control of health insurance out of the hands of the government and in the hands of individuals and families.

Conclusion.  If the special session is a sign of things to come, the regular legislative session might be one of the least polarizing and most productive in state history.  In spite of disagreements over Health Savings Accounts and the restructuring of the Department of Commerce, conservatives and liberals are united behind the themes of job creation and economic revitalization.  Additionally, members on both sides of the aisle have pledged to make balancing the budget and job creation foremost priorities in the current legislative session.  Legislative leaders should make improving the quality of life for all Wisconsin citizens their priority.  By shrinking the size of government, reducing taxes for small businesses and individuals, and exercising fiscal restraint, legislators can ensure Wisconsin will once again become an engine of economic growth.

The Wisconsin section of the Weekly Political Forecast is authored by PAI’s Deputy Policy Director.

Download PAI Summary & Analysis of WI Dept. of Workforce Development Report

PAI

PAI

WI Dept. of Workforce Development Sends Mixed Signals on the Growth and Stability of the State’s Economy

The Wisconsin Department of Workforce Development released a report indicating that unemployment in Wisconsin decreased from 7.8 percent in October to 7.6 percent in November. Secretary of Workforce Development Robert Gassman noted that in November 2010 Wisconsin’s unemployment rate dropped to its lowest level since January 2009.[1] However, with thousands of Wisconsinites out of work, the state budget deficit at an all time high of $3.3 billion[2] and expectations for it to skyrocket to $5.4 billion in 2011[3], the Wisconsin economy remains in a precarious position.

Secretary Gassman, Governor Doyle and liberal Democrats in the state legislature contend that the .2 percent decline in the state’s unemployment rate indicates that Wisconsin is on the verge of economic recovery.  Gassner, Doyle and liberals in the state legislature fail to mention, however, that Wisconsin lost 5,200 nonfarm jobs in the month of November and remains 150,000 jobs shy of its pre-recession (2006) totals.[4] Of the 5,200 jobs lost in the month of November, 4,800 were in the private-sector,[5]and 400 were government jobs.[6]

What is more, in the last twelve months, Wisconsin managed to create just 24,400 new private-sector jobs.[7] This makes governor-elect Scott Walker’s task of creating 250,000 new jobs by November 2015 more herculean than initially anticipated.  Dr. Abdur Chowdhury, a professor of economics at Marquette University, stated that at the current rate of growth (24,400 new jobs in twelve months), governor-elect Walker and the Wisconsin economy would have to create nearly 60,000 new jobs per year if it intends to achieve the goal of 250,000 new jobs by November 2015.[8] The only encouraging news to come out of the report is that 2,600 new manufacturing jobs were created in November 2010.[9]

Obvious Question: How can the unemployment rate decrease but the total number of jobs increase?  John Schmid, a staff writer for the Milwaukee Journal Sentinel, in describing the methods used by the Office of Workforce Development to calculate the aforementioned statistics, wrote, “The government calculates job-creation data and the unemployment rate from two separate monthly surveys.  The two have contradicted each other frequently throughout the recovery, sending mixed signals and suggesting that the labor market is stagnating without clear direction.  Not until the numbers move in tandem will economists be able to discern a clear direction.”[10]

Thus the new job report released by the Wisconsin Office of Workforce Development ends up telling us very little about the vigor of the Wisconsin economy. With thousands of Wisconsinites out of work, the state budget deficit at an all time high of $3.3 billion[11] and expectations for it to skyrocket to $5.4 billion in 2011[12], the Wisconsin economy remains in a precarious position.

In order to restore the Wisconsin economy, lawmakers from both parties should make cutting taxes for small businesses, reducing the corporate/business tax rate, investing more money in business research and development at state universities, and creating a climate of business friendliness the foremost priorities in the upcoming legislative session.  Rather than getting bogged down in the specifics of the state’s economic recession, the remainder of this forecast intends to offer viable solutions for creating jobs, and restoring economic growth, in the Badger State.

Step 1: Cutting taxes for small businesses.

Economists and politicians from both sides of the political spectrum are in concurrence that small businesses are a vital part of the state economy.  In an attempt to create small business jobs and restore Wisconsin’s economic prosperity, governor-elect Scott Walker has pledged to make tax cuts for small businesses one of his chief priorities in the upcoming legislative session.

Late last month, governor-elect Walker announced that he will encourage the state legislature to enact a state income tax reduction of 1 percentage point for businesses with fifty or fewer employees. The Wisconsin Department of Revenue finds that there are 321,300 businesses in the state-owned by sole proprietors category and another 69,400 S corporations comprised of 100 or fewer shareholders.[13] These tax cuts will allow small businesses to expand their labor force, provide Wisconsin residents with greater goods and services, and most importantly, increase the state’s tax base.

Governor-elect Walker, in describing the intricacies of the tax cut, and its impact on the Wisconsin business climate, wrote, “I will call for a tax cut of as much as 20 percent off the small businesses that provide most of the jobs in Wisconsin.  That is money that can be used to hire more workers at small businesses here in Wisconsin.”[14]

Dr. Abdur Chowdhury, a professor of economics at Marquette University, is optimistic that a reduction in business taxes will lead to an increase in statewide employment.  In an interview with Jason Stein of the Wisconsin State Journal, Professor Chowdhury said, “Reducing the tax burden on small businesses would be a good way to encourage them to expand their business and hire more.”[15] The first step to restoring economic prosperity in Wisconsin is to provide job creators with tax relief. A one point reduction in income taxes for small businesses, proprietorships and S corporations, will create jobs, a climate of business friendliness and foster greater economic productivity.

Step 2: Reducing the state’s corporate and business tax rate.

An exorbitantly high corporate/business tax rate is partially to blame for Wisconsin’s struggling economy. If Wisconsin intends to once again become an engine of economic growth it should work assiduously to attract a greater number of Fortune 500 companies to the state.  Scott Cohn, a Senior Correspondent for CNBC News, found that Texas, the nation’s number one state for business in 2010, is home to 64 Fortune 500 companies—more than any other state in the union.[16]

Conversely, Fortune Magazine found that in 2010 Wisconsin was home to a paltry ten Fortune 500 companies.[17] Wisconsin’s exorbitantly high corporate/business tax rate has led several corporations to leave or threaten to leave the Badger State, in recent years.  The U.S. Federation of Tax Administrators found that as of January 2010, the Wisconsin corporate/business tax rate has stood at a markedly high 7.9 percent.[18]

In order to restore economic growth in Wisconsin, PAI contends that the Republican controlled state legislature should do away with the business/corporation tax and, instead, follow in the footsteps of Texas, the nation’s top ranked economy in 2010, and impose a franchise tax.  The United States Federation of Tax Administrators, in discussing the specifics of the Texas franchise tax, wrote, “Texas imposes a Franchise Tax, otherwise known as a margin tax, imposed on entities with more than $1 million total revenues at a rate of 1 percent, or 0.5 percent for entities primarily engaged in retail or wholesale trade, on lesser of 70 percent of total revenues or 100 percent of gross receipts after deductions for compensation or cost of goods sold.”[19]

A two-year freeze in the Wisconsin business/corporation, coupled with the implementation of a franchise or consumption tax has would generate copious amounts of revenue, entice more Fortune 500 companies to set up camp in the Badger State and provide businesses with the capital necessary to create hundreds of new jobs.  If Wisconsin intends to create jobs, attract businesses, and become an engine of economic growth, it should eradicate its corporate/business tax, and instead, install a franchise or consumption tax.  Doing so would drastically improve the state economy, and as aforementioned, exponentially increase state revenue.

Step 3: Greater investment in research and development at colleges and universities.

To spur economic growth and foster a climate of “business friendliness,” the Wisconsin State Legislature should markedly increase expenditures for research and development at colleges and universities. In addition, Wisconsin public schools should expand their business education curriculums by providing students with access to organizations such as Junior Achievement, Students in Free Enterprise, and the National Institute for Economic and Financial Literacy.

The Wisconsin Economic Summit, in its enthralling November 2010 report, entitled Be Bold: The Wisconsin Prosperity Strategy, found that research and development at Wisconsin universities has created new jobs and generated large amounts of new revenue.  In discussing the impact that university research and development has had on the state economy, the authors of the report wrote, “Led by the University of Wisconsin-Madison, academic R&D is a $1.2 billion economic activity in the state, translating into more than 38,000 new jobs.  UW-Madison is perennially in the top three universities in the nation for R&D at more than $900 million, while the M7 region, with the Medical College of Wisconsin, UW-Milwaukee, the Blood Center of Wisconsin and Marquette University, collectively pull in more than $250 million.”[20]

The authors of the report, who happen to be some of the most successful and highly respected business leaders in the state, outline a myriad of strategies for restoring economic prosperity and fostering a culture of business friendliness in the Badger State.  Some of the recommendations made by the authors of the report include: increased funding for research and development on UW campuses; the creation of a strong academic research and development base in Madison; an increase in entrepreneurial literacy in K-12 schools through programs such as Junior Achievement and the Wisconsin-based National Institute of Economic and Financial literacy; and, an increased emphasis on employment-based learning on all college, university, and technical college campuses.[21]

The implementation of the aforementioned recommendations would increase state revenue, boost enrollment at Wisconsin colleges and universities, and provide K-12 students with the information necessary to be informed consumers. Governor-elect Walker and Republicans in the state legislature should make the abovementioned recommendations a foremost priority in the next legislative session.

Step 4: Fostering a climate of “business friendliness in Wisconsin.

Wisconsin Republican leaders should work indefatigably in the upcoming legislative session to foster a climate of business friendliness in Wisconsin.  As aforestated, Wisconsin is home to just ten Fortune 500 companies, enforces an exorbitantly high business tax and is one of the nation’s least-friendly business states.  Forbes Magazine, in its annual ranking of the best states for business, found that Wisconsin ranks forty-third in the nation. Only Vermont, Hawaii, Maine, Michigan, Mississippi, Louisiana, and Rhode Island rank below Wisconsin in business friendliness.[22]

Conversely, Fortune Magazine in a chart entitled America’s Top States For Business 2010 found that in 2010 Wisconsin ranked twenty-seventh in the nation in business friendliness.[23] Among Midwestern states, only Illinois, Ohio, and Michigan were less business friendly.[24] What was more, Fortune found that Wisconsin’s economy is ranked thirty-first in the nation.[25] Wisconsin’s low rating is precipitated by three factors: an exorbitantly high corporate/business tax rate, combined reporting and a high property tax burden.

Combined reporting is demonstrably bad for Wisconsin corporations because it stifles economic productivity.  Rather than paying taxes on just their business, corporations are forced to pay taxes on subsidiary companies or divisions within their corporation. BizTimes, a Milwaukee-based business periodical, found that in the first quarter of 2009, Harley Davidson took a $22.5 million dollar charge as a result of new combined reporting laws.[26] Debra Sadow Koenig and James Phillips in their beguiling article entitled “Wisconsin Adopts Combined Reporting and Other Tax Changes”, wrote, “In general, combined reporting means that each member of an affiliated or ‘combined’ group of corporations engaged in a unitary business reports on a combined report the unitary business allocable income allocable to Wisconsin.”[27]

Governor-elect Walker and Republican legislative leaders have stated they would consider reforming or eliminating combined reporting in the upcoming legislative session.  In fact, State Senator-elect Leah Vukmir (R-Wauwatosa), called for a special session of the legislature to repeal combined reporting.[28] With Republicans firmly in control of both houses of the legislature and the governor’s mansion, it appears certain that combined reporting will be repealed in the 2011-2013 legislative session.

In addition to an exorbitant corporate tax rate and combined reporting, Wisconsin business growth has been stifled by an excessive property tax burden.  Nationally renowned economists Dr. Arthur Laffer, Stephen Moore, and Jonathan Moore, in their book Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, found that as of January 2010 Wisconsin ranked forty-first in the nation in property tax burden.[29] Wisconsinites are required to pay $41.33 in property for every $1,000 earned in income.[30]

The state’s high property tax value has been demonstrably bad for business development, and economic growth.  In order to create a more business friendly state, PAI encourages the state legislature to replace the business tax with a franchise/consumption tax, eradicate combined reporting for Wisconsin corporations, and most importantly, drastically diminish the property tax burden.

Conclusion:

The release of the November unemployment numbers by the Department of Workforce Development illustrates that the Wisconsin economy remains in a volatile position.  While unemployment dropped to its lowest levels since January 2009, 5,200 nonfarm jobs were shed last month.  Economists predict that the Wisconsin economic situation will continue to deteriorate in the months ahead, as several leading manufactures have stated that they intend to cut back their labor force.

John Schmid, of the Milwaukee Journal Sentinel, noted that the closing of Everbrite, LLC, and NewPage Paper Corporation later this year will cost 400 Wisconsinites their jobs (36 at Everbrite and 366 at NewPage).[31]

The implementation of the strategies outlined in this document will restore Wisconsin to a sound fiscal footing, create jobs, and foster a climate of business friendliness in the Badger State.  Wisconsin’s fate hinges on the enactment of these critical legislative initiatives.  If Wisconsin intends to restore economic prosperity it is paramount that the recommendations outlined in this forecast are enacted into law at the onset of the upcoming legislative session.

[2] Jason Stein, “Wisconsin GOP prepares to hit the ground running on job creation.” The Wisconsin State Journal, November 25, 2010, http://www.jsonline.com/news/statepolitics/110730744.html.

[3] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html

[4] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html

[5] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html

[6] WISN News, “State’s Unemployment Rate Drops, National  Numbers Worsen.” Press Release, December 16, 2010, http://www.wisn.com/money/26163395/detail.html?treets=mil&tml=mil_7am&ts=T&tmi=mil_7am_1_08000112172010

[7] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html

[8] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html. Note: see pages 1-2 for this information.

[9] WISN News, “State’s Unemployment Rate Drops, National  Numbers Worsen.” Press Release, December 16, 2010, http://www.wisn.com/money/26163395/detail.html?treets=mil&tml=mil_7am&ts=T&tmi=mil_7am_1_08000112172010

[10] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html

[11] Jason Stein, “Wisconsin GOP prepares to hit the ground running on job creation.” The Wisconsin State Journal, November 25, 2010, http://www.jsonline.com/news/statepolitics/110730744.html.

[12] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html

[13] Jason Stein, “Wisconsin GOP prepares to hit the ground running on job creation.” The Wisconsin State Journal, November 25, 2010, http://www.jsonline.com/news/statepolitics/110730744.html.

[14] Scott Walker, “Emergency Special Session on jobs.” Scott Walker for Wisconsin, November 1, 2010, http://www.scottwalker.org/node/1623

[15] Jason Stein, “Wisconsin GOP prepares to hit the ground running on job creation.” The Wisconsin State Journal, November 25, 2010, http://www.jsonline.com/news/statepolitics/110730744.html.

[16] Scott Cohn, “CNBC’s Top States For Business 2010—And the Winner is Texas.” CNBC News, July 13, 2010, http://www.cnbc.com/id/37642856/CNBC_s_Top_States_For_Business_2010_And_The_Winner_Is_Texas

[17] Fortune, “States, Wisconsin, 2010.” Fortune Magazine, May 3, 2010, http://money.cnn.com/magazines/fortune/fortune500/2010/states/WI.html

[18] United States Federation of Tax Administrators, Range of State Corporate Income Tax Rates, March 2010, http://www.taxadmin.org/fta/rate/corp_inc.pdf

[19] United States Federation of Tax Administrators, Range of State Corporate Income Tax Rates, March 2010, http://www.taxadmin.org/fta/rate/corp_inc.pdf.  Note: See page 2, footnote Z, for the exact quote.

[20] The Wisconsin Economic Summit, Be Bold: The Wisconsin Prosperity Strategy, November 2010, p.5.  The report can be found at: http://www.wiroundtable.org/summit/Resources/BE_BOLD_FINAL_Dec1_2010.pdf

[21] The Wisconsin Economic Summit, Be Bold: The Wisconsin Prosperity Strategy, November 2010, pp. 8-12. http://www.wiroundtable.org/summit/Resources/BE_BOLD_FINAL_Dec1_2010.pdf

[22] Kurt Bladenhausen, “Table: The Best States for Businesses and Career,” Forbes, November 13, 2010, http://www.forbes.com/2010/10/13/best-states-for-business-business-beltway-best-states-table.html

[23] Fortune, America’s Top States For Business 2010, Fortune Magazine, http://www.cnbc.com/id/37516043/

[24] Fortune, Business Friendliness 2010, Fortune Magazine, http://www.cnbc.com/id/37516038

[25] Fortune, America’s Top States For Business 2010, Fortune Magazine, http://www.cnbc.com/id/37516043/

[26] Andrew Weiland, ‘The Hog Tax: Should Combined Reporting be Repealed?” Biz Times, May 14, 2010,  http://www.biztimes.com/news/2010/5/14/the-hog-tax

[27] Debra Sadow Koenig, and James Phillips, “Wisconsin Adopts Combined Reporting and Other Tax Changes,” Godfrey &Kahn, Attorneys At Law, News, Publications & Events, February 25, 2009, http://www.gklaw.com/news.cfm?action=pub_detail&publication_id=809

[28] Andrew Weiland, ‘The Hog Tax: Should Combined Reporting be Repealed?” Biz Times, May 14, 2010,  http://www.biztimes.com/news/2010/5/14/the-hog-tax

[29] Dr. Arthur B. Laffer, Stephen Moore, and Jonathan Williams, Rich State, Poor State: ALEC-Laffer State Economic Competitiveness Index 3^rd ed. (Washington, D.C: The American Legislative Exchange Council, 2010), 120.

[30] Laffer, Moore, and Williams, 120.

[31] John Schmid, “Wisconsin Continues to shed jobs.  Economy shows mixed signals as 4,800 jobs are lost and unemployment rate dips.”  The Milwaukee Journal Sentinel, December 16, 2010, http://www.jsonline.com/business/112014099.html

Walker’s legislative agenda has six major components.  First, he intends to establish a Waste, Fraud and Abuse Commission, which will be given the daunting task of eliminating waste in the state budget. Second, he has pledged to balance the state budget—possibly his most arduous task.  Third, he has pledged to assist the state legislature with the creation of a small-business tax cut, intended to stimulate economic growth, create jobs, and foster a business-friendly environment in Wisconsin.  Fourth, he intends to restructure the Department of Commerce so as to allow the Secretary of Commerce to spend a maximum amount of time on economic revitalization.  Fifth, he has pledged to provide tax breaks for those with health savings accounts.  Finally, he has pledged to curb malpractice lawsuits against medical professionals.  Walker’s ambitious legislative agenda will restore economic prosperity, make Wisconsin a business-friendly state, and restore integrity to Wisconsin’s government.

Waste, Fraud and Abuse.  Walker told the Wisconsin State Journal late last week that the declaration of an “economic emergency” will be his first act as Governor, declaring that he will call for a special session of the legislature intended to deal solely with issues pertaining to the economy, job creation and taxes.  The “economic emergency” declaration includes the creation of a Waste, Fraud and Abuse Commission which will be responsible for finding $300 million per year to trim from state spending, which body he can create without the deliberation of the legislature by issuing an executive order.  The chief priority of this committee will be cutting wasteful spending from the state budget, government agencies and appropriations bills, but Governor-elect Walker has yet to outline his plan for selecting the members of this important committee.  It is critical that the Commission be independent and composed of individuals dedicated to Wisconsin’s welfare ahead of their own political agendas, because the eradication of wasteful and out-of-control spending can ultimately lead to a balanced budget and the restoration of economic stability.  So long as this committee puts politics aside and focuses on the issue at hand, the budget can be balanced and economic prosperity will be restored.

Balancing the State Budget.  Walker’s most arduous task in the upcoming legislative session will be balancing the state budget.  The Wisconsin Department of Revenue finds that the Wisconsin budget deficit is the highest in state history, a colossal $3.3 billion.  In order to balance the state budget, Walker’s plan will probably aim to eradicate wasteful spending, freeze agency budgets or cut them to pre-2006 levels, drastically alter BadgerCare, and cut income and property taxes.  Walker’s promise of creating 250,000 new jobs during his tenure will not become a reality if he fails to make economic recovery his foremost priority in the 2011-2013 period.

Tax Cut for Small Businesses.  Small businesses are the engines that keep the Wisconsin economy running, and in order to improve the Wisconsin economy, cutting taxes for small businesses and entrepreneurs should be a chief priority.  Throughout his campaign, Walker pledged to make business expansion and job creation the focal points of his legislative agenda in the years to come.  Last week, he announced that he will encourage the state legislature to enact a state income tax reduction of one percentage point for businesses with 50 or fewer employees.  The Wisconsin Department of Revenue finds that there are 321,300 businesses in the state owned by sole proprietors and another 69,400 S corporations comprised of 100 or fewer shareholders.  A one-point reduction in income taxes for small businesses, proprietorships and S corporations will create a climate of business friendliness, add jobs, and foster greater economic productivity.

Restructuring the Department of Commerce.  Late last week, Walker outlined an ambitious plan for restructuring the Wisconsin Department of Commerce.  Currently, the Wisconsin Department of Commerce is responsible for regulating business and industry, fostering economic growth, and promoting business growth.  Under Walker’s reform proposal, the Secretary of Commerce would no longer be responsible for low-level regulation of such things as amusement rides and elevators to petroleum storage tanks, as he is today.  Walker’s restructuring would make economic and business development the chief priority of the Secretary of Commerce.  In addition, Walker’s plan includes combining the Wisconsin Department of Commerce with the Wisconsin Housing and Economic Development Authority.  In short, Walker’s proposal would reduce the size of government and transfer much control of the economy from the government to the private sector.

Income Tax Deduction for Health Savings Accounts.  The fifth prong of Walker’s reform agenda is a state income tax deduction for health savings accounts.  Health savings accounts, much like Social Security personal accounts, allow individual citizens to control their own personal well-being and livelihood and create a culture of ownership by transferring control of health insurance from the government to the individual.  Walker recognizes that individuals are better suited to control their health care needs than the government, and as a result, he has made the expansion of health savings accounts, and tax breaks for those currently in existence, priorities in the 2011-2013 legislative session.  It is expected that these tax breaks will encourage Wisconsinites to reject government-run health insurance, and in turn, embrace health savings accounts.

Curb Malpractice Suits against Doctors.  Throughout his campaign, Walker made it clear that he would work to curb frivolous malpractice lawsuits against Wisconsin’s medical professionals.  It is important to note that Walker did not go so far as to say that he supports the enactment of widespread tort reform, but he supports efforts to reduce the price of medical malpractice insurance for Wisconsin medical professionals.  The Business Journal notes that in Wisconsin, there is a cap of $750,000 for noneconomic damages but no cap on medical expenses or lost income.  In effect, malpractice lawsuits can have devastating effects on physicians and, importantly, the quality of care they offer.  The fear of being sued for negligence or malpractice has forced many physicians to perform fewer surgeries and potentially harmful medical procedures, but Walker supports significant reforms that would limit the effects of this problem. A reduction in the number of malpractice suits, coupled with the enactment of a groundbreaking tort reform bill, should be focal points of Walker’s legislative agenda.

The Wisconsin section of the Weekly Political Forecast is authored by PAI’s Deputy Policy Director.

1. The Bill is smaller in scope than the Arizona law, SB 1070.
2. If someone was unable to prove their identity and the legal status of their citizenship, they would be held in jail for up to 48 hours.  If they could not prove legal presence in the state by then, they would be turned over to immigration authorities.
3. The bill would allow citizens to sue municipalities and counties if they did not believe they were enforcing the immigration law. Those communities could pay fines of $500 a day for not complying with the law.
4. The bill also would prevent local governments from passing ordinances barring officials from inquiring about the immigration status of those receiving public services.
5. Arizona’s law also puts requirements on employers that aren’t in this bill.
6. The bill would be introduced after the two-year legislative session starts in January, but it might not be debated until later in the session.

Read Full Article Here or Below.

Those arrested or charged with crime would have to show they are here legally.

By Patrick Marley of the Journal Sentinel
Nov. 10, 2010

Madison — People suspected of crimes in Wisconsin would have to prove they were legally in the United States or be turned over to federal immigration authorities under a bill that will be introduced next year in the newly Republican state Legislature.

“I want Wisconsin to be recognized as a state that will be on the side of Arizona,” said bill author Rep. Don Pridemore (R-Hartford).

But he noted Wednesday that his bill is smaller in scope than the Arizona law that has drawn international attention and a lawsuit by the U.S. Department of Justice.

“This is minor in comparison of what could be done and should be done by the federal government,” Pridemore said.

Christine Neumann-Ortiz, executive director of the Milwaukee immigrant-rights group Voces de la Frontera, said any possible law would face a certain legal challenge from groups such as hers and possibly the federal government.

Neumann-Ortiz said the legal fight would be a huge distraction from other state priorities such as creating jobs and would pose a threat to the civil rights of Latinos and other minorities in the state.

“This allows for a lot of abuse for civil rights for anybody,” she said. “It’s irresponsible leadership.”

Governor-elect Scott Walker and his fellow Republicans who will run the Legislature have said their primary focus will be on creating jobs and solving a $3 billion, two-year budget shortfall without raising taxes. But during the campaign Walker also said he would sign an Arizona-style immigration law.

Meanwhile, a top Republican leader said he could see measures even more closely aligned to Arizona’s law than Pridemore’s bill getting traction in the Legislature.

Under Pridemore’s bill, those arrested or charged with a crime would have to show they are legally in the state with a passport, birth certificate, immigration documents or other records, if police had a reasonable suspicion they were here illegally.

They would be held in jail for up to 48 hours. If they could not prove legal presence in the state by then, they would be turned over to immigration authorities.

Pridemore noted the bill applied only to those under suspicion of violating a law. Someone pulled over for a broken tail light might have to prove his identity, but a passenger in the vehicle would not, he said.

The bill would allow citizens to sue municipalities and counties if they did not believe they were enforcing the immigration law. Those communities could pay fines of $500 a day for not complying with the law.

The bill also would prevent local governments from passing ordinances barring officials from inquiring about the immigration status of those receiving public services. Pridemore said he put that in the bill in response to a Madison ordinance, which would be automatically repealed if the bill passed.

“We’re proud to be a welcoming community,” said Rachel Strauch-Nelson, a spokeswoman for Madison Mayor Dave Cieslewicz. “The new Republican majority needs to stay focused on jobs and economic development.”

The Arizona bill signed into law this year is the strictest in the country. It makes the failure to carry immigration papers a crime and gives police broad authority to detain those suspected of being in the United States illegally. Arizona’s law also puts requirements on employers that aren’t in Pridemore’s bill.

Sen. Glenn Grothman (R-West Bend) said he was considering signing onto the bill.

“It sure is frustrating that the federal government under Clinton, Obama and Bush seems not to take our immigration laws seriously,” Grothman said. “I have a lot of sympathy for Representative Pridemore’s efforts.”

Pridemore said he would introduce the bill after the two-year legislative session starts in January, but it might not be debated until later in the session.

Rep. Robin Vos (R-Rochester), the incoming co-chairman of the budget-writing Joint Finance Committee, said Pridemore’s idea has merit, but lawmakers must first focus on creating jobs and fixing the state budget. That could mean putting off the bill until fall 2011 or later.

Senate Republican Leader Scott Fitzgerald of Juneau said he hadn’t reviewed Pridemore’s bill, but he believed such a bill could get momentum in the Legislature – as could bills that went further by replicating Arizona’s law.

Jim Buchen, head lobbyist for Wisconsin Manufacturers & Commerce, said his group would have concerns about proposals that included new requirements on employers but otherwise wouldn’t get involved in immigration bills.

Walker spokesman Cullen Werwie said the governor-elect’s transition team had not had a chance to review the bill, but he noted Walker’s support for Arizona’s law.

Walker initially said during the campaign that he had concerns about Arizona’s immigration law, but after criticism from supporters he quickly changed positions and said he would sign such a measure.