Stop the insanity

Back in September of last year, Forbes ranked Wisconsin as the third worst state for business. Given that, yesterday's news that Harley Davidson may consider leaving the state as it searches to lower manufacturing costs by $54 million should come as no surprise.

What is more surprising – and upsetting – is the fact that as of February, Wisconsin now has more government jobs than manufacturing jobs. Year-over-year government employment has increased a half percent (due to increases at the local government level), while manufacturing employment has decreased 6%. (State government employment dropped 4%).

Of course shrinkage in employment in manufacturing, or any private sector industry, is what one would expect during a recession like the one we are experiencing. What puzzles me is the growth of government over that same time period. It appears that in good times, government grows, and in bad times, government still grows – only more slowly.

The reason this is important is because all government wages are paid for out of private sector wages, via taxation. While government employment grew by 1800 jobs over the past year in Wisconsin, private sector jobs fell by 75,000. Thus, we have fewer private sector workers supporting more government workers. And people working and earning in the private sector are the only resource that government has. Because of that, this is not sustainable.

Exacerbating this is the fact that government jobs are more costly than private sector jobs, mainly due to unionization. While the unionization rate in the private sector has fallen from 30% in 1965 to just 7% today, 39% of state and local government workers are currently unionized. The high wages and generous benefits packages that public sector unions negotiate for their members are paid for by taxpayers.

Now, I'm all for workers lobbying and fighting for the best pay they can get in a competitive environment. But have you ever stopped to think about why the unionization rate is so much lower in the private sector than in the public sector? The simple answer is "competition." Private sector businesses are subject to competition, and don't have the luxury of forcibly taking more money from their customer base in order to fund unsustainable cost structures. In contrast, government has no competition. Which DMV are you going to choose? That's right – the only one there is.

It is important to remember that every dollar that is taken out of the private sector in order to fund government leaves one less dollar in the private sector to invest in creating new jobs and increased wealth. No matter how important or vital some of the things government does for us (police protection, transportation infrastructure, etc.), government does not create wealth. But government can help create a positive environment for the private sector to do just that.

Would that our State Legislature was actually doing that, I would not be writing this right now. Unfortunately that is not the case. Wisconsin is projected to have a $2 billion budget deficit next year. Given the past, we know that the likely response of our current state and local legislators will be to increase the size of government, and add more regulations and taxes making it harder for Wisconsin businesses to grow and expand, and harder for hard-working taxpayers to keep their own money.

Don't get me wrong – I am not for coddling businesses. I am not for giving businesses special deals to "buy them off" and induce them to stay in our state. What I am for is creating an environment that allows businesses to operate free of the costly regulations and taxes that drive up the cost of doing business and hiring workers.

We simply can't continue milking taxpayers and businesses in order to fund an ever growing government. This year the federal budget deficit alone is projected to be more than the entire federal budget was in just 1995. This isn't just a state or local problem – it is a national problem. The way out of the woods doesn't rest with Democrats. It doesn't rest with Republicans. And it certainly doesn't rest with career politicians of any political persuasion. It is going to require electing common sense citizens with a strong adherence to the principles of limited government, who are willing to make the necessary difficult choices.

Until we do that, we'll simply continue reaffirming the oft-stated definition of "insanity": Doing the same thing over and over and expecting different results.

Let's stop the insanity.

Obama’s “Read my lips” moment

As I have heard conservative pundits over the past several weeks insisting that a VAT tax was all but a sure thing in the very near future, I generally tossed it off as an effort to simply rile up their base. Then I see this headline yesterday:

"Obama suggests value-added tax may be an option"

Oops.

Those of us who follow politics closely can't help but recall then-candidate Obama's oft repeated promise to not raise any taxes on those making under $250,000. A VAT tax – which is assessed on goods at each step of the way as they move through the production and distribution system to the retailer – would ultimately raise the price of goods to consumers as the tax is built into the price. Surely, if enacted, this would qualify as a serious and material broken campaign promise then, right?

But then I see this comment by the president from his weekly radio address on April 10th:

"And one thing we have not done is raise income taxes on families making less than $250,000. That's another promise we've kept." [Italics mine]

It is clear what is happening here. The federal government has once again passed a massive entitlement program which we cannot afford, but was sold to the public as a fully funded deficit reduction package. Most people believe that in reality additional funding sources are going to be needed in the form of increased taxation. So the President is slowly and retroactively modifying his prior campaign promise in order to open the door to a potential VAT tax.

This largely helps explain why a recent Rasmussen Poll found that only 8% of Americans expect a tax cut under President Obama, even though the President campaigned on a promise to cut taxes for 95% of Americans.

The President also recently said that we need to determine "the core services that we need and the government should provide. And then we decide how do we pay for that." I couldn't agree more. I'll refer the President to Article I, Section 8 of the U.S. Constitution which spells out clearly the seventeen enumerated powers of Congress, and Article II, Section 2 which spells out the powers of the Executive Branch. This – and only this – is what the Federal government has the power to do. The Tenth Amendment leaves all other powers to the state governments and to the people.

I'm no fool. I realize pretty much all politicians lie and break promises. But that doesn't mean we don't call them out on it when it happens - or when we suspect they might be laying the groundwork to make it happen, as in this case. And it also justifies many Americans' rational suspicion towards the massive "reform" packages politicians of all stripes have been trying to sell to the American people lately. Most of the time the bill-of-goods being sold is not quite exactly what it is purported to be.

Will this be President Obama's "read my lips" moment? Will he really push for a tax that the Senate just voted 85-13 to declare it as a "massive tax increase that will cripple families on fixed income"? Or will he live up to his campaign pledge to not harm the middle class with any tax increases?

One can hope. Unfortunately it was also "Hope" that got us to this point in the first place.

Tax stats

Given that today is tax day, I thought I'd have a little fun with some random tax statistics, juxtaposed against some other random stats. Here you go:

• $27.7 billion ….. amount spent by Americans to prepare their taxes this year – enough dollar bills to circle the world 105 times if laid end to end

• 3.7 million ..… number of words in the Federal tax code

• 788,000 ….. number of words in the Bible
  

  
  

• 63 ….. number of pages my tax filings were this year
  

  
  

• 127 ….. the number of years the Federal government was able to function WITHOUT a Federal income tax
  

  
  

• 1913 ….. the year the 16^th Amendment was added to the Constitution, authorizing the Federal income tax
  

  
  

• 1% ….. the percentage of the population that was required to pay Federal income taxes after the 16^th Amendment and associated tax laws were passed
  

  
  

• 53% ….. the percentage of the population that currently pays a Federal income tax
  

  
  

• 400 ….. the number of pages in the Federal tax code in 1913
  

  
  

• 68,000 ….. the number of pages currently in the Federal tax code
  

  
  

• 600 ….. the number of pages in a 1945 Boeing B-17 Bomber design spec manual
  

  
  

• 40% ….. the percentage of total income taxes paid by the top 1% of earners
  

  
  

• 66% ….. the percentage of Americans who say we're overtaxed
  

  
  

• 81% ….. the percentage of Mainstream Americans voters who say we're overtaxed
  

  
  

• 74% ….. the percentage of those in the Political Class who disagree with the above 81%
  

  
  

• 95% ….. percent of Americans President Obama said would get a tax cut under his Administration
  

  
  

• 8% ….. the percent of Americans who think their taxes actually WILL be cut during President Obama's term
  

  
  

• 46% ….. percentage of Americans who currently expect a tax hike under President Obama
  

  
  

• 115,000 ….. the number of people employed by the IRS
  

  
  

• $10.7 billion ….. the expense budget of the IRS in 2007
  

  
  

• 6 ….. the number of days the average American has worked so far this year accumulating disposable personal income for themselves and their family. The first 99 days were for the government.

Tax Freedom Day was April 9^th this year.