A Tale of Two Approaches

It has long been my contention that we need to change course as a state and a nation and reduce overall government spending and taxes.  We’ve tried higher taxes and spending, including a much-heralded $850 billion federal economic stimulus package, but it hasn’t worked.  

In fact, increased spending, taxation and debt are actually having a negative effect on our economy.  According to the U.S. Bureau of Labor Statistics, there are two million more unemployed Americans today than there were in January 2009 while the number of food stamp recipients has skyrocketed by 41 percent, from 32 million to 45 million.

Until this year, Wisconsin has followed a similar trajectory. Over the last several years, state lawmakers raised taxes on individuals and job creators while jacking up state spending to record levels. The impact on our state economy was devastating and, in the end, was what forced the controversial but badly-needed budget reforms passed by Republicans in 2011.

That’s why I was so surprised when, last week, Democrats in Madison proposed a divisive plan to raise Wisconsin’s income tax by $70 million in order to fund another increase in government spending. Due to the fact that their tax increase proposal targets only those Wisconsinites making over $1 million per year, it is, without a doubt, the latest salvo in an increasing game of class warfare being waged by one side of the political spectrum.

The real tragedy is the narrow-mindedness of this Democratic tax hike plan. While claiming it would help to employ more people, they fail to understand that fully 93 percent of the filers they’re targeting have income from a sole proprietorship, partnership, S-corporation or farm – the types of organizations that form the backbone of small business in Wisconsin. Democrats claim it to be good public policy, but it is really a recipe for a double-dip recession. Enacting policies that are proven failures won’t work if we simply try them again.

According to the U.S. Small Business Administration, 86 percent of Wisconsin’s businesses have fewer than 20 employees.  While larger businesses get flashy headlines when they make a large-scale hire or layoff, we need small businesses to succeed in order for our economy to truly heat up. At a time when government regulatory activism and high taxes have caused widespread uncertainty and stalled small business investment, the last thing we need is to cause further fear and doubt in the marketplace. 

Those Wisconsin taxpayers being targeted by Democrats are not the Wall Street titans and fat cats they’re made out to be. Many never see this income because they’re investing it right back into their business, seeking to maintain profitability and create more jobs for fellow Wisconsinites. Is it any wonder so many businesses have left our state in recent years when they’re not only being squeezed by government taxes and regulations – but also are relentlessly demonized by partisan politicians and political activists?

Right now, we have a front row seat to a great debate being waged throughout Wisconsin and America as a whole. One side of the discussion sees reduced taxes and government spending as the most direct route back to prosperity. The other side believes in an activist role for government, with large-scale spending funded by high rates of taxation on individuals and businesses.

I believe that government has become too involved in the economy, and this has lengthened our economic downturn. While Wisconsin’s economy is doing better than most other states because of our new emphasis on spending restraint and tax and regulatory reform, bad federal fiscal policy is holding us back from a stronger recovery. If we’re to fully recover, we need to move in a new direction – one being charted by Wisconsin Republicans.

To contact me with any questions or comments or to sign up for my regular e-updates, please send an e-mail to Rep.Knodl@legis.wi.gov or call me at (608) 266-3796.