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Wisconsin Already Rifled the Deep Pockets

By Patrick McIlheran

Wisconsin is $3.6 billion worse than broke next budget, and unions don't much like Gov. Scott Walker's cure, a central part of which is cut their dreamy benefits and restrain their power to bargain them still higher.

But the teachers largely went home this past week, leaving the Capitol protests to the harder left -- Madison's permanent party of retiree rads with heads full of Chomsky, and mohawked kids there to party against The Man. The Wobblies have a banner up; the "Revolutionary Communist Party" displays its manifesto. The politics were more distilled.

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The real professionals, the Democrats, were there, too, at least the ones in the Assembly, the senators still being in quorum-denying exile. The Assembly Dems reacted with shock when Republicans passed Walker's proposal after 61 straight hours of debate. They shouted, they cursed; someone appeared to have thrown a drink.

But ask what Wisconsin should do about its deficit and even the Dems have little answer. Their main one? Tax the rich.

Their timing stinks. Not only did people just pay their property taxes in December -- ours are eighth worst in the country -- but we're also in the months when people notice their income taxes. Ours are harsh.

In fact, the nonpartisan Tax Foundation inconveniently revealed last week that among states, Wisconsin has the fourth heaviest tax burden. State and local governments ate up 11% of Wisconsinites income in 2009. That reverses a trend in which the state's take was falling slowly.

Nor should this be a surprise. Two years ago, just as the recession hit, then-Gov. Jim Doyle also faced a deficit. A Democrat armed with Democratic control of the Legislature, he raised taxes. He proposed a two-year budget in which spending rose 10%. He and the Legislature then raised taxes by $3.14 billion.

They raised taxes on an astonishing breadth of things. They raised them on home sales. They raised them on music downloads. They added a hospital-room tax in a scheme to milk more out of the feds. They raised them on cigarettes. And gasoline. And investment returns.

Really big chunks came from changing how corporate income is taxed and from adding a new top income tax bracket for families making $300,000 or more. That rate went from 6.75% to 7.75%.

In other words, Wisconsin just finished taxing corporations and the rich harder. The results were several. First, the Tax Foundation says 42 other states have better business tax climates than Wisconsin, and while Democrats pooh-pooh such rankings, businesses don't. Several made high-profile decisions to expand elsewhere.

Second, all that taxing of the rich and corporations left us with a $3.6 billion deficit next year. Doyle paid for his spending increase in part with stimulus money, now gone.

Wisconsin already is a net exporter of high-income earners, high-income retirees and college grads. The young man who was shouting on a megaphone in the Capitol Thursday about plutocracy, his voice ragged with anger, is likely to head someplace that's more attractive for job-creating entrepreneurs once he's got a degree. There's a good chance we can already see his old grammar-school teacher's taillights heading south as she takes her impossibly secure, generous and free pension down to a state that will tax it more gently.

Public employees demand -- to the point of shutting down schools for days -- that taxpayers keep providing free pensions and surreally cheap health coverage, and they offered to concede only if they can keep the bargaining power that got them such a great deal in the first place and that will soon undo any concessions.

They insist the rest of Wisconsin tax itself harder for this. They see last budget's huge tax increase and swallow it unremarked, other than to demand still more. The Capitol's rotunda now hosts a high festival of lefty protesters unanimous in the belief that the rich get off easy -- and clueless that Wisconsin just rifled the rich's pockets to no great effect.

Patrick McIlheran is a Milwaukee Journal Sentinel editorial columnist who blogs at jsonline.com/blogs/mcilheran. E-mail pmcilheran@journalsentinel.com

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