The situation in Wisconsin is really touching a nerve with me. Governor Walker (R) was elected as part of the Republican victory in 2010. He is now proposing a combination of policies that the country recognizes as a preview of things to come for many state governments. In his first month in office, Governor Walker pushed through a package of tax cuts for corporations. Wisconsin's corporate tax rates are comparable or below those of their main neighbors: Illinois, Minnesota, and Iowa (Wisconsin and Michigan share a border along the base of the Upper Peninsula but this is a sparsely populated part of Michigan that depends largely on mining which cannot relocated because of tax rates). Wisconsin's personal income tax rates are slightly higher than those in Illinois and Iowa but somewhat lower than those in Minnesota. Wisconsin's sales taxes are lower than those of Illinois, Iowa and Minnesota. I go through these comparisons to suggest that Wisconsin's citizens are not excessively taxed. Wisconsin's tax rates are comparable especially to its neighbors. This is important because a major argument that state leaders put forward for cutting taxes - especially on businesses is to encourage new businesses to relocate to their state and deter old businesses from relocating out of their state. My brief survey of Wisconsin tax rates suggests that this probably not a major problem for the Badger State.
Sunday, February 20, 2011
Now, there is a recession on as you know. So by cutting taxes on corporations, Governor Walker is worsening his state's revenue short fall problem. This brings us to the other part of his policy agenda. Walker is proposing significant cuts to public employee benefits and a dramatic curtailment of public employee unions right to collectively bargain. The implication of his rhetoric and policies is that the public sector is over paid at the expense of a long suffering private sector. Walker's proposals have provoked a bitter fight. Wisconsin Democrats have left the state to prevent a quorum in the legislature. Public employees and union activists and sympathizers have hit the streets. Tea Party counter protesters soon followed. The newly elected Republican governor of Iowa is making exactly the same noises and a similar fight is coming for Iowans along with many other states.
But are public employees really over paid?? US West posted about this earlier but it bears repeating. Public employees are not paid more than their private sector counter parts with similar qualifications and responsibilities. In fact, they are paid significantly LESS than their private sector counter parts. In fact, the gap between private and public salaries increases as the qualifications expected of the worker go up. At the level of high school graduates, public employees make about 97% of their private sector counterparts. For college graduates public employees make just 75% of their private sector counterparts. Once you get to the level of professional employees (people with JDs, MDs, and PhDs), public employees make just 63% of the salaries awarded to their private sector counterparts. The only thing that public employees can point to that compensates them somewhat for this gap is their benefits packages. Public employees do tend to have good health and retirement packages that are seen as more secure than those operated by many companies because they are guaranteed by democratically accountable state governments rather than by corporations prone to rob their pension funds as they sink into bankruptcy.
I really hope the Democrats and the unions in Wisconsin can stand up to this. And I'm very glad that President Obama called this for what it is, an assault on unions. But it is also part of a broader assault on non-military public employees.
UPDATE (2/21): I found this video online of a Wisconsin Democratic legislator angrily describing the tricks that the Republicans have been using to ram through the Walker budget bill. What he is describing is tyranny of the majority.
Posted by Raised By Republicans at 5:53 AM