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Plan 10: Taxpayer Empowerment Amendment - The T.E.A. Act

Summary

In order to protect the individual taxpayer and draw companies and jobs to Wisconsin, we must seriously alter our tax structure. The Taxpayer Bill of Rights (TABOR) is a concept advocated by groups across the United States, and a version of it has been considered in Wisconsin, as a way of limiting the size of government. A Neumann Administration will propose its own version, known as the T.E.A. Act. Neumann will call on the Wisconsin legislature to pass bills that will increase representation by the people, ensuring that the government is not the final arbiter of its own power.

Limits on Raising Taxes & Borrowing Money

Mark Neumann calls on the legislature to pass a bill requiring that any increase in income or sales tax rates be approved by the voters in a referendum. Similarly, some proposals by state government to borrow money will also require a referendum.

Current Situation

Government Spending is out of Control

Spending and taxes have increased greatly in Wisconsin during Governor Doyle's tenure in office. The high taxes and spending combined with the recession are driving businesses and jobs, and therefore revenue, from our state. According to the Wisconsin Public Research Institute, for fiscal years 2010 and 2011, our current state government has increased general fund taxes and fees by $1.153 billion in an attempt to cover their deficit.1 They have also transferred funds from protected areas in order to fill this general fund shortfall.

The Ratchet-Up Effect

In Wisconsin, the growth of government revenue and spending has outpaced the growth of income. Wisconsin uses a progressive income tax; the problem is that when income rises, income tax revenues rise more rapidly than income and when income falls, income tax revenues fall more rapidly than income. This can result in a "ratchet up" of taxes.2

In periods of economic prosperity, the government increases spending to match the increase in revenue (acquired from income taxes). However, when times are not as prosperous and revenues fall, governments often accelerate spending, based on poor economic theory. As a result, there is pressure to increase taxes to offset the budget shortfall. The latter scenario is at hand with the current economic recession.

In addition, our current state government has used over $2 billion in federal stimulus money to help fill the budget deficit.P85FiP All of this means that the taxpayer is under assault, and the state government shows no signs of relenting any time soon.

We must understand that money taken in taxes cannot, by definition, go towards their highest valued use. The highest valued use, and therefore most efficient use, can only be attained when the individual is allowed to choose how he or she spends their money. Such is a fundamental truth: businesses, entrepreneurs and individuals are put at a severe disadvantage when the government tries to propel economic growth under a high-tax scenario.

Mark Neumann's Plan

Under Mark Neumann's leadership, Wisconsin will have the best business climate in the world. When this is achieved, we will not only empower industries like manufacturing and agriculture, but will also lay the groundwork to become leaders in new industries like energy development, IT, and medical. Wisconsinites will be free to produce according to their strengths, rather than having to abide by our poor business climate.

Mark Neumann has already laid out a plan to (1) cap spending at 1% less than inflation which will result in a 24% across-the-board reduction in taxes over 8 years [see Mark Neumann's plan to CUT SPENDING AND REDUCE TAXES], (2) create research triangles across Wisconsin that will fuse higher education with business [see Mark Neumann's plan to CREATE 300,000 JOBS], and (3) eliminate property taxes in 2011 [see Mark Neumann's plan for the BIGGEST ONE-YEAR TAX CUT IN WISCONSIN HISTORY]. This Taxpayer Empowerment Amendment – which adapts some ideas from a Taxpayers' Bill of Rights, can be the fourth leg of Wisconsin's strong chair.

Taxpayer Bill of Rights

The Taxpayer Bill of Rights (TABOR) is a concept advocated by groups across the United States, and a version of it has been considered in Wisconsin, as a way of limiting the size of government. In effect, TABOR is a rule that any piece of state legislation, over a set dollar amount, must first meet approval of the people of Wisconsin.

The T.E.A. Act

Wisconsin ought to be collecting the lowest amount of taxes necessary to provide services. Earlier this decade, advocates in Wisconsin pushed for a Taxpayer Bill of Rights that would have established several safeguards for taxpayers.4 Mark Neumann's fiscal plans combine unique ideas with some TABOR ideas to ensure that the people of Wisconsin–not career politicians–always have a say in Wisconsin's fiscal health, and will be represented in their taxation.

Limits on Tax Increases

Mark Neumann calls on the legislature to pass a bill requiring that any increase in income or sales tax rates to be approved by the voters in a referendum at the next regularly scheduled election to ensure that the voters have a fair vote in the matter.

Limits on Borrowing Money

Wisconsin has too much debt. So, Mark Neumann calls on the legislature to pass a bill requiring certain proposals by the state government to borrow money to require a referendum. The type of bonding in question will be limited to General Purpose Revenue bonding. Any such referenda could only be held during regular election dates to ensure that the voters have a fair vote in the matter.

To determine which General Purpose Revenue bonding should be required to be approved by a referendum of the people, it will be tied to its impact on Wisconsin's debt. Neumann will assemble experts on budgets, bond ratings, and spending to assess what the exact threshold should be.

Extraordinary Circumstances

To guard against extraordinary circumstances like an emergency–in which it is not reasonable to wait for the next regularly scheduled election–if two-thirds of the legislature vote for a tax increase or borrowing it can go into effect without voter approval. However, even in this instance the people will have a say. The people of Wisconsin will have up to 180 days from when the law is passed to collect signatures equal to 2% of the state's population to trigger a referendum to stop the legislature's tax increase or borrowing.

Mark Neumann's Record

Americans for Tax Reform

"Wisconsin residents need leaders committed to fiscal responsibility and economic policies that support the growth of business and the prosperity of the people. Mark Neumann was a Taxpayer Protection Pledge signer as a Member of Congress in the late 1990s, and I commend him for reaffirming his commitment to the taxpayers of Wisconsin as a candidate for Governor."

– Grover Norquist, President of Americans for Tax Reform, on Mark Neumann signing a pledge to never raise taxes.5

Milwaukee Journal-Sentinel6

Mark Neumann, Republican candidate for governor, signed a pledge to veto any tax increase if elected. Neumann signed the same pledge, sponsored by Grover Norquist's Americans for Tax Reform . . . Americans for Tax Reform said seven state senators and 18 members of the State Assembly have signed the pledge. Nationally, it's been signed by seven governors and more than 1,100 state lawmakers. The pledge caused problems for Republicans in 2007 when they controlled the Assembly because members eventually approved a state budget that included an increase in the cigarette tax.


1 Richard Chandler, Wisconsin's State Budget Outlook: The Worst is Yet to Come, Wisconsin Public Research Institute, Jan. 2010, available at http://www.wispolitics.com/1006/Chandler_study_on_next_governor_s_budget.pdf.

2 Dr. Barry Poulson, A Taxpayer's Bill of Rights for Wisconsin, Americans for Prosperity, available at http://www.americansforprosperity.com/taxpayers-bill-rights-wisconsin.

3 Matthew DeFour, Independent Analysis Says Federal Stimulus Brought $2 Billion to Wisconsin, Wisconsin State Journal, Feb 17, 2010, available at http://host.madison.com/wsj/news/local/govt_and_politics/article_51cb5ee4-1c25-11df-bf41-001cc4c002e0.html.

4 Frank Lasee, Wisconsin Needs a Taxpayer's Bill of Rights, The Heartland Institute, Feb. 2004, available at http://www.heartland.org/full/14339/Wisconsin_Needs_a_Taxpayers_Bill_of_Rights.html.

5 Joshua Culling, Mark Neumann Signs Taxpayer Protection Pledge in WI Governor's Race, Americans for Tax Reform, March 24, 2010, available at http://www.atr.org/mark-neumann-signs-taxpayer-protection-pledge-a4691.

6 Lee Bergquist, Neumann Signs No-Tax Pledge, Milwaukee Journal Sentinel, March 24, 2010, available at http://www.jsonline.com/blogs/news/89036837.html.


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