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Be prepared for sales tax increase

By Matt Pommer

Wisconsin’s economic downturn in the early 1980s was far worse than the current recession if seasonally adjusted unemployment numbers are the measuring stick.

The state experienced 13 straight months of double digit unemployment in the early 1980s. Unemployment has not topped 10 percent in the present downturn. But the economic crunch is hurting state revenues, and elected officials may face choices similar to those in 1983.

In 1982, the state enacted a 1 cent increase in the state sales tax, taking it to 5 percent. Republican Gov. Lee Dreyfus touted the idea as a “temporary” increase in the sales tax, but few people believed that political double talk.

The 1983 Democrat-controlled Legislature made the sales tax increase permanent and enacted a one year income tax surcharge to balance the state budget.

This year Wisconsin Way, a coalition including real estate agents, unionized teachers, road builders and municipal government groups, is ready to offer a comprehensive budget balancing plan. Insiders say it will include a proposal to increase the state sales tax.

A similar idea was floated two years ago, but the concept was dead on arrival. Senate Majority Leader Russ Decker, D-Weston, made sure it never was fully explored in the state Capitol.

Instead, the Democrats who controlled both houses of the Legislature and the governor’s office imposed higher income taxes on the wealthy and collected more corporate income tax from multistate firms.

Federal aid helped state governments across America solve part of their budget problems. But that and higher income tax provisions didn’t meet all the needs. Local property taxes have risen.

Each of the three major candidates for governor is busy talking about how many jobs will be added in the next four years if he is elected. Employment always increases as a national recession recedes, but manufacturing — a key element in Wisconsin’s economy — was slow to recover in the 1980s. Economists said that is the likely pattern now.

Given the choices of higher income, property or sales taxes, elected officials may turn to the 1982 solution of an increased sales tax. It appears to be a faster way to collect money in budget balancing activities.

One thing is different this time: A significant amount of commerce is conducted on the Internet, and dealing with how much of that commerce excludes the sales tax remains a cloud on the fiscal horizon.

Many people wishfully believe the answer to government budget problems can be solved by eliminating waste, fraud and corruption. There isn’t that much corruption and fraud.

Waste, of course, often is considered to be government spending to solve problems for others, not you.

Matt Pommer worked as a reporter in Madison for 35 years. He comments on state political and policy issues.

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