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Saturday, June 30, 2007

Begging The GOP to Save Them

The Democrats in Wisconsin's State Senate this week pass the largest state tax increase in US history, 13 times larger as a portion of GDP than any other state. Now, they are hoping that the GOP controlled State Assembly will save them by scrapping their plan. They don't want to be saddled with the weight of their proposed tax increases come next year, but want to be able to say they tried.

Many Senate Democrats are touting the plan for universal health care (which is 15 billion of the increase) as a "savings" to the state of $2 billion, because no one (except those covered by union insurance plans, who are exempted) would have to pay premiums anymore. Here's the problem with that logic, most people don't pay 100% of their health insurance costs, nor do businesses currently pay (in most case) 100% for coverage of employees.

If right now that divide was 50/50, consumers would make out like bandits, kind of, and business would get crushed by an extra 7 billion in taxes. How does that equate, well the average yearly income in Wisconsin is $35,500 per year, so by pushing that extra cost to businesses to break even they'd have to cut 197,000 jobs, more than the number of people currently unemployed in the state.

Add to that the other few billion in business taxes in the Senate budget and what you have isn't a 'caring state taking care of it's people', but instead a wreckless fiscal policy that is sure to destroy the state economy.

So, what are the Assembly Republican's to do on this matter? They've vowed to kill most of the 18 billion in tax increases in the Senate budget, but should they? Would they be better off, politically, in the long run to have just enough of them vote "present" to allow it to pass, and then hand the bill to the Governor?

Jim Doyle has said he doesn't like the health care provision, and would rather increase funding to BadgerCare in a way to get 98% of the state insured, and probably at a lower cost. But would he risk alienating the Democrats who stood by his other tax requests?

My advice to the GOP is to kill it, even though it might look like a great way to get a huge wedge issue for the 2008 election. While Democrats will use the defeat as ammunition by saying republicans don't care about your health, the truth is, there may not be as much political gain as some think if they let it pass.

Michigan provides the prime example. That state's government has consistently enacted business unfriendly laws, and continues in a deep recession. Yet the residents keep re-electing Democrats to run the state.

Counting on the brains of the electorate to see through the feel good haze of universal health care and "punishing business" isn't a wise move, as Michigan proves. Instead, kill the Senate budget, and start over, for the good of the state.

Technorati Tags: Wisconsin, Budget, GOP, Democrats, Taxes, Michigan


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