It is often said that elections have consequences. But the Nov. 4 results are not as important as the policies that should follow. It doesn’t matter whether someone is a Republican or a Democrat, it matters how they decide to spend (or not spend) taxpayer money.
Republican gains in the U.S. House and the flip from blue to red in the U.S. Senate give hints as to what proposals we can expect as a nation. Debates will certainly come up about Obamacare, federal spending levels and possibly tax reform. How President Obama reacts to such bills in anyone’s guess, though.
The deadlock in Washington may continue for another two years. I for one am not holding my breath.
True reform is possible in the states, however, especially when it comes to taxes.
With major electoral wins from conservatives, states like Florida are likely to keep their low property taxes and non-existent state income tax. But the states that are truly ready for reform are places like Wisconsin and Illinois.
The two states could not be more different. In 2011, Wisconsin Gov. Scott Walker, a Republican, erased a $3.6 billion deficit without raising taxes, reined in government spending and passed historical collective-bargaining reforms.
His peer to the south, Illinois Gov. Pat Quinn, a Democrat, went in the opposite direction. He increased income taxes by 67 percent and corporate taxes by a third. Instead of reining in spending, he continued with the status quo. Today, Illinois’ pension liability is one of the highest in the country, and the state is almost always billions of dollars behind on its day-to-day bills.
Where is Wisconsin today? Mr. Walker says the budget will once again end in balance. Taxes have been cut by $2 billion. University of Wisconsin tuition has been frozen for two years. Property taxes are lower than they were in 2010. On Nov. 4, Mr. Walker was re-elected. Mr. Quinn? He lost.
Both states are ready for reform. Mr. Walker should build on his reforms from the past four years. While Wisconsin has seen vast improvements, you might be surprised to find out that it ranks 43rd in the Tax Foundation’s most recent Business Tax Climate report. In fact, Illinois was actually 12 spots ahead in 31st.
That just means the Dairy State is ready for bold reform. Taxpayers should demand a plan to move Wisconsin toward a flatter and fairer tax. The income tax code needs to be simplified to reduce the number of special interest credits, and property taxes need to continue to be reduced.
Illinois is primed for the same reforms. To immediately reduce taxes, it is simple. The state just needs to do nothing. Mr. Quinn’s tax increases are set to expire at the beginning of the year. Governor-Elect Bruce Rauner, Illinois Republican, just needs to hope the outgoing administration doesn’t make the 2011 increases permanent.
To say I expect additional tax reform right away in Illinois would be a stretch. State legislators are notorious supporters of the status quo. But to see its sitting governor lose the election at least shows that taxpayers are ready for a new direction.
And it is not just Wisconsin and Illinois that are ready, it is every state across the country. Taxpayers deserve prudent decisions to be made by their local leaders and now is the time for them to accomplish that.
Just look at what North Carolina was able to do. Two years ago the southern state ranked 44th in the Tax Foundation’s ranking mentioned above. After dramatic tax reform passed, the state now ranks 16th.
This is possible everywhere. We just need leaders who are willing to support policies that are best for taxpayers and not just what looks good for their next campaign.