Friday, January 19, 2007

Wisconsin Makes the Honor Roll!

Take that, WMC!

Countering the right-wing claims about how bad Wisconsin is for business, the (truly) nonpartisan Corporation for Enterprise Development (CFED) recently ranked Wisconsin as one of the top states in the country for performance, business vitality, and development capacity.

The differences between the business rankings by the CFED and the business rankings by the Tax Foundation, a favorite of conservatives, couldn't be starker.

While Wisconsin is ranked 38th in the country in the Tax Foundation rankings, it's ranked 7th for performance, 18th for business vitality, and 16th for development capacity in the CFED rankings. While Wyoming is ranked 1st in the Tax Foundation rankings, it's ranked 15th/45th/25th in the CFED rankings. While Alaska is ranked 3rd in the Tax Foundation rankings, it's ranked 42nd/48th/43rd in the CFED rankings.

You get the idea.

So why the big differences?

The easy answer, of course, is methodology. The Tax Foundation, predictably, focuses solely on taxes. The CFED rankings, on the other hand, take into account a number of factors such as average annual pay growth and greenhouse gas emmisions on the performance side, manufacturing investment and start-up business job creation on the business vitality side, and energy costs and patents issued on the development capacity side.

In other words, while the Tax Foundation looks at one factor and makes assumptions (or, more accurately, others make assumptions) about how that impacts business performance, the CFED rankings rate how businesses are actually performing in the states and how they are poised to perform in the future.

To be sure, if the Tax Foundation rankings were simply used for what they are -- a tax ranking -- that would be fine. Who can fault them for doing what they set out to do?

But that's not the only way the Tax Foundation rankings -- and others like it that focus solely on taxes -- are used. Instead, these rankings are used as rhetorical ammunition to help craft public policy.

"High taxes are driving businesses out of the state!" went the common charge during the (second) TABOR drive last spring. While TABOR failed miserably (twice, I might add), it's bound to be back at some point. And, in the meantime, corporate lobby groups like WMC will continue to use business tax rankings to push special interest policies under the threat that businesses won't be able to survive in the state without them.

What's most unfortunate is that these tactics derail public policy from focusing on initiatives that would really help business in the state such as comprehensive health care reform and putting state resources into creating more university spinoff companies.

The latter, it just so happens, is one of the areas that the CFED study found Wisconsin could use significant improvement. And it's not that the opportunities for improvement aren't ripe for the picking in Wisconsin -- they are.

For Madison, improvement means opening the gates on stem cell research. For Milwaukee, improvement means committing funds to Chancellor Santiago's research initiative. For Stevens Point, improvement means putting resources into promising research on developing and manufacturing alternative energies from renewable resources like wood chips.

Indeed, when the Journal Sentinel covered a study that exposed the growing economic disparities between Madison and Milwaukee, just about everyone agreed -- including a researcher from the Wisconsin Taxpayer Alliance, which published the study -- that what helps Madison get a big leg up economically is the UW.

The same could be true throughout the state. After all, Wisconsin has one of the most highly rated public university systems in the country. There's absolutely no reason the state should rank so low in university spinoffs; but, the fact remains, the UW hasn't received a lot of fiscal love from the state legislature in recent years (I even heard GOP legislator Alberta Darling say that very thing recently).

Now, if this post turns out like others like it, at least one anonymous commenter will read this section and claim that I'm advocating a tax increase. That's not true. What I'm talking about here is prioritization.

Heading into the '07-'09 budget process, for instance, the state will be dealing with accounting for millions of dollars in new tax breaks that were promised in the last legislative session. And most of these tax breaks are not the kind that will help you and me, but rather the kind that the Recess Supervisor astutely called "
boutique tax credits and exemptions" in a recent post. In other words, they're special interest handouts.

Perhaps this upcoming budget cycle is shot because of these promises that already have been made. But when it's all said and done, and the regular business of the legislature kicks into gear, the special interests will again come with their hands out for more.

And, when that happens, let's hope our elected officials are looking at the most appropriate studies in terms of our state's business needs.

UPDATE: The WMC line, from WisBusiness: " 'But this sounds like it is weighted more toward quality of life factors rather than hard economics,' [a WMC spokesperson] said, noting that the WMC will continue to push for lower taxes as well as regulatory and liability reform."

Sorry, WMC. These measures include quality of life factors and hard economics; and, if anything, it's weighted toward the latter, regardless of how good news "sounds" to your organization.

LATE UPDATE: Sen. Mary Lazich (R-New Berlin) peddles the latest Tax Foundation rankings for 2007.

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Blogger Rich Eggleston said...

The Tax Foundation and Wisconsin Manufacturers & Commerce have been so discredited on the tax/business ranking claim that it's hard to believe anyone takes them seriously.

When the Institute for Wisconsin's Future pointed out how few corporations pay corporate income taxes, WMC responded with the Tax Foundation's claim that Wisconsin's business climate is lousy because taxes are too high.

And here I always thought that the reason Wisconsin's business climate is bad is that WMC is badmouthing our state all the time.

The Tax Foundation's annual P.R. gimmick of announcing "Tax Freedom Day" also has been debunked, at least insofar as it pertains to middle-class working people.

"The Tax Foundation's claim of ever-increasing tax burdens is in direct contradiction to evidence from the two leading sources of tax information for Congress — the Congressional Budget Office and the Joint Committee on Taxation," the Washington, D.C.-based Center on Budget and Policy Priorities said in a report a few years ago.

"These authoritative sources find that taxes on typical middle-income families are substantially lower than the taxes the Tax Foundation claims Americans pay on average. Moreover, CBO and the Joint Committee on Taxation find that taxes on middle-income families have been declining in recent years, not rising as the Tax Foundation reports would lead the public to believe."

But why would the Tax Foundation try to hoodwink us? Follow the money.

"The Tax Foundation is funded partially by private donations from members, but is primarily funded by corporate donations, with limited foundation funding from the Koch Foundation, Earhart Foundation, etc," says Sourcewatch, an on-line publication of the Center for Media and Democracy.

The Koch Foundation referred to is the Charles G. Koch Foundation, named for the co-owner of Koch Industries, the largest privately held corporation in America. Remember his brother David, whose Americans for Prosperity tried to impose TABOR on Wisconsin? Other heavy hitters who have contributed to the Tax Foundation include the Lynde and Harry Bradley Foundation.

According to the Media Transparency website, "The overall objective of the Bradley Foundation.. . is to return the U.S. — and the world — to the days before governments began to regulate Big Business, before corporations were forced to make concessions to an organized labor force. In other words, laissez-faire capitalism: capitalism with the gloves off.

"To further this objective, Bradley supports the organizations and individuals that promote the deregulation of business, the rollback of virtually all social welfare programs, and the privitization of government services."

These are people who adhere to the maxim, "If you can't say something bad about people, don't say anything at all."

Former Madison Mayor Paul Soglin marveled at WMC's ability to find studies showing that Wisconsin is behind the eight ball, so he decided to do some research.

"I used only studies offered by right wing foundations, or the shill front groups trying to disgrace the home state. I took seven studies and looked at the bottom 12 or 13 states in each ranking. The studies covered taxes, so called 'tort reform,' overall taxes, business taxes, and the overall cost of doing business," Soglin wrote in his blog, waxingamerica. com. "The finding is very simple. 78% of the states are ranked in the bottom quarter in one or more of the studies."

It's like Garrison Keillor's Lake Wobegon, but in WMC and its allies' book, everyone is below average.

Rich Eggleston

January 19, 2007  
Blogger Seth Zlotocha said...

Thanks for your comment, Rich.

I agree with everything you write. But, you know as well as anyone, WMC is taken seriously. And as long as they’re the biggest spending lobby group in the state (or anything close to it), they – and the rankings they peddle – will continue to wield a hefty stick when it comes to public policy.

January 20, 2007  

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