Reducing Regulations And Freeing Up Capital

In recent days, I have been primarily focusing my legislative efforts on how best to jump-start our state economy and restore a climate of growth and job creation.

We’ve made good progress in setting the table for a strong recovery, and the rest of the country is taking note, as evidenced by a Chief Executive Magazine survey from earlier this year that had Wisconsin’s state business climate ranking climb from 41st to 24th. That’s because we’ve attacked head-on some of the top issues affecting economic growth in our state, most specifically the regulatory climate and tax burden.

One recent example is last week’s passage of Assembly Bill 177 by the Wisconsin State Assembly. AB 177 reforms the Department of Natural Resources’ permitting process for certain activities near navigable waterways, limiting the number of times the DNR may request additional information after a permit application has been submitted.

Specifically, the bill allows the DNR to make one request for additional information and also provides time limits for how long the DNR may review an application. If the DNR fails to meet the time limits laid out in AB 177, the permit is automatically granted.

AB 177 is a good example of a collaborative legislative effort. It was drafted by a Republican legislator with the help of the DNR, and was approved by the Assembly with a bipartisan majority of 65-32.

Still, more work needs to be done and the State Legislature continues to seek new ways to make Wisconsin more appealing for job creation. Perhaps the most urgent need is to eliminate rampant uncertainty for those seeking to invest in our economy by reducing the tax burden on job creators.

Seeking to address this problem, a provision was included in the 2011-13 state budget that provides a tax credit to any manufacturing or agricultural business that has tax liability. When fully phased in, this provision will amount to a $130 million tax cut on Wisconsin manufacturers and agri-businesses each year. This is not a program where a government bureaucrat will determine the winners and losers; it will be available to anyone who has qualifying tax liability.

Once we create confidence for those looking to take risks with their capital, our economy will turn around. Unfortunately, it appears we are not going to get help in that regard from the federal government. Earlier this week, President Obama put forth a proposal to increase taxes by a staggering $1.5 trillion. A tax hike of this magnitude is never good, but this one is potentially catastrophic because it falls disproportionately on capital formation – the biggest key to restoring job growth.

When you tax something, you get less of it. For example, we tax cigarettes at a high rate because we’ve made a decision as a society to discourage people from using them. The very same principle applies to capital. When you raise taxes on the source of business growth, it discourages people from investing their money in new enterprises. Rather than growing the economy, it adds more instability and uncertainty to an already shaky situation.

While I am gravely concerned about the president’s plan, I will be continuing my work to improve our Dairy State economy. Even if we don’t get any help from the president in terms of easing the burden on capital formation, we must forge ahead and do the best we can with the tools we have to work with here in Wisconsin.