Return the surplus to taxpayers

By Owen Robinson, Boots & Sabers

With the state’s coffers overflowing, every hog is at the trough jostling for position and every politician is eyeing their favorite one to fatten. There will be no shortage of requests, demands, justifications, and admonitions from advocates to spend every dollar of the surplus and more. Instead, the Legislature should give it, and more, back to the beleaguered taxpayers.

First, let us dig into the anatomy of the forecasted surplus. According to the 62-page DOA report, the state entered the budget with a $2.52 billion balance, added $1.78 billion to the balance in first fiscal year of the budget, and projects to add an additional $2.276 billion to it by the end of this fiscal year for a total biennial budget surplus of $6.576 billion. This is based on the current economic outlook and current tax policies.

The reason for the surplus is relatively straightforward. The state spent every dollar it appropriated (actually, a little more), but it collected far more in taxes than it needed. For example, in fiscal year 2022, which ended on June 30 of this year, the state collected $534 million more in income taxes than lawmakers said they needed in the budget. It collected $338 million more in sales taxes and $1.05 billion more in corporate taxes than needed.

Why? The primary reason is inflation. While the underlying economy is struggling, the price of everything is going up. Incomes are up, corporate taxable profits are up, the price of consumer goods are up, and taxes are based on percentages of those things. The budget did not make any inflationary assumptions when it was created. Inflation has averaged 7.4% since the beginning of this budget in July of 2021. If the projected surplus is realized, it will be due to the state collecting about 10.6% more in taxes than it budgeted.

The assumptions used to forecast the surplus are telling, and troubling. The Department of Administration uses economic projections from a single source — IHS Markit. It is concerning that in such tumultuous economic times that the DOA would rely on a single source. They forecast that the nation will have a mild recession in 2023 with a 0.2% decline in GDP before returning to sluggish growth in 2024. It also forecasts that inflation will decline to 3% versus prior year by the end of 2023.

I hope they are right because those are relatively optimistic projections compared to many other sources. But it reminds us that a forecast is just an educated guess, and we should not spend money that we do not have.

The data also show that while inflation is pushing up wages, the buying power of those wages are not keeping up. According to the data in the DOA report, personal income rose by 7.4% in 2021 (inflated by COVID bailouts) and 2.3% in 2022. That compares to annualized inflation of 7.1% in 2021 and 7.75% year-to-date in 2022, according to the Federal Reserve. Every dollar of wage increases is being consumed by inflation and then some. Wisconsinites’ expenses are increasing at a far faster rate than their wages.

Under normal circumstances, it is immoral for the government to overtax the people and then use that as an excuse to increase spending. With a suspect economic forecast and the buying power of Wisconsinites being eaten away by inflation, it would be unconscionable for our elected leaders to do anything other than to return the surplus to the people who paid it with a sheepish, “ope.”

Read more at Boots & Sabers.

Empower Wisconsin | Dec. 2, 2022

Listen to more:


Explore More

  • PowerUp: Big Money Left all in on Wisconsin Supreme Court race

    Empower Wisconsin January 27, 2023 The national left is all in on Wisconsin’s crucial Supreme Court race, a contest that…

  • Senators re-introduce No Taxpayer Funding for Abortion Act

    Empower Wisconsin | Jan. 27, 2023 The No Taxpayer Funding for Abortion Act, the lawmakers say, attempts to clean up…

  • All Woke Up: ‘Affirming care’ for sadomasochists

    Empower Wisconsin | Jan. 27, 2023 The Hippocratic Oath doesn’t include a command that physicians provide “affirming care” for patients…

  • Fiscal hawks demand fiscal reform for debt ceiling deal

    Empower Wisconsin Jan. 26, 2023 Fiscal hawks in the Senate reiterated their demands for fiscal reforms and spending cuts Tuesday…

  • Evers signals big spending ahead in State of the State

    Empower Wisconsin Jan. 25, 2023 By M.D. Kittle MADISON — In his fifth State of the State address Tuesday evening,…

  • Spotlight| Study: Choice schools outperforming public peers

    By M.D. Kittle MADISON — On this National School Choice Week, a new study by the Wisconsin Institute for Law…

2 responses to “Return the surplus to taxpayers”

  1. Jeanine Avatar
    Jeanine

    I have stated numerous times that whether state or federal level, we are being overtaxed beyond the fiscal needs. This should be illegal for any government level to do. Not too difficult to assess high taxes even if the funds are not needed. Many probably think it is because the respective government level did a good job in spending, but that is never the case. And, the outcome is picking and choosing who “the powers to be” get the excess. What happened to developing a budget and fitting the funding with the budget needs. Give it back to the people!

  2. Dave Avatar
    Dave

    ‘Give it back to the people!’

    While that always has a catchy tune, it has its own set of issues;

    1) Who gets it?;

    2) Sliding scale or set amount?;

    3) Delivery system (cost of that isn’t anything to sneeze at)?;

    4) The ‘pigs’ all line up to take credit for how they brought home the tofu…;

    5) Fraud;

    6) Looming financial doom that seems to always follow ‘Christmas’ with taxpayer money

    I suspect the ‘best’ way to handle this (on top of getting our tax collection issues in order) would be to lower the tax rate coupled with ***RESPONSIBLE*** spending and the ‘excess’ to be used to fund our ‘household needs’ for ‘x’ years.

Leave a Reply

Your email address will not be published. Required fields are marked *