Feb. 13, 2004

GUEST COLUMN

Tax Freeze? More like frostbite.

By David Newby

Less than six months after Wisconsin faced a massive budget shortfall resulting in many serious program cuts, several Republicans are pushing a radical plan to cap state and local revenues. Rep. Frank Lasee, among others, is trying to import a complicated constitutional amendment from Colorado — the so-called Taxpayers' Bill of Rights (TABOR), which basically freezes real per capita public spending permanently.

Once again, with this TABOR, Republicans are attempting through state regulation to micro-manage the ability of local and state governing bodies to determine the variety and quality of public services available to residents, and the quality of public life available to us all. No one enjoys paying taxes, but with the relentless demonization of taxes as somehow the enemy of prosperity, we have lost sight of the role of government in creating a civil society in which all can reside safely and with some minimum economic security.

Wisconsin promoters of the TABOR plan claim it will be a silver bullet for Wisconsin's economic problems. According to an editorial by Jim Haney of Wisconsin Manufacturers and Commerce, the low taxes resulting from TABOR made Coloradoans richer, more productive and increased job growth. Unfortunately, like many pipedreams, the facts don't bear out the claim. Governing Magazine - an award winning, non-partisan journal read by 85,000 state and local policymakers - reports that TABOR "has complicated Colorado's fiscal life so much that some of its supporters have soured on it. 'In hindsight', says Republican Senator Ron Teck, 'I wouldn't vote for it again' ".

There have been major cuts in funding for Colorado cities and counties, so they have increased local option sales taxes. These taxes vary in rate and exemption rules from one community to another, so businesses have to navigate different costs in each. Many companies say that Colorado "is a nightmare to do business with," according to Phyllis Resnick from the Tax Center at the University of Denver. Colorado's bond rating has declined, which forces Colorado taxpayers to pay more in state interest payments. And since the end of 2000, Colorado lost 80,000 jobs, a rate 300% higher than the U.S. average.

The revenue caps and added tax cuts leave Colorado a major deficit which it cannot address because of the permanent tax freeze. Cuts in public services have already been dramatic. According to the Governing Magazine report card, Colorado is now one of the ten trouble spots in the United States in terms of children's health care. Education funding as a percent of income is currently the lowest in the country.

Wisconsin TABOR promoters say that the Colorado tax freeze generated economic development. But, according to data from the Bell Policy Center (a state policy research center), Colorado's growth was part of a regional boom that began before TABOR was passed. The other fast growing states - Arizona, Utah, Idaho and Nevada - did not have these restrictive revenue caps. "Climate, environment, lifestyle, clean industry and diversifying economies were the economic drivers," states Carol Hedges, author of Ten Years of TABOR, a comprehensive assessment of the policy.

The citizens of Colorado have learned that while the TABOR tax freeze sounded like a good idea, in fact it is a painful and inflexible way to control taxes which actually undermines the state economy, transportation and education systems, and leaves working people, children, the sick and the elderly out in the cold. This so-called taxpayer bill of rights is a destructive bill of goods that will cost Colorado residents dearly for years to come. Wisconsin would be wise to dodge this bullet.

Newby is president of the Wisconsin AFL-CIO

Reprinted with permission of the author.