Stewardship: A Way of Life
Faithful Citizenship in 2002
Budget Shortfalls and Taxation
Fifth in a Series
By Wisconsin Catholic Conference
Budgets and taxes are almost always key issues in election
campaigns. While tax laws can be complex and difficult for the
average person to understand, tax policies represent a very basic
judgment by citizens in a community as to what they value and how
much they will ask of themselves to support those values.
Budgets, while they are laden with numbers and graphs, represent
very human judgments about those needs and priorities to which the
community commits its resources. This year, the issues of tax
policy are linked to the "structural deficit" in Wisconsin's state
budget. Together, they present a critical issue in the contests for
Governor and the legislature.
Church on Government and Taxes
While no one likes to pay taxes, doing so is an obligation of
citizenship. The Catechism affirms that paying taxes, like voting
and defending one's country is "morally obligatory" (#2240).
Further, "it is the responsibility of all citizens, acting
through their government, to assist and empower the poor, the
disadvantaged, the handicapped, and the unemployed.... Government
may levy the taxes necessary to meet these responsibilities and
citizens have the moral obligation to pay those taxes" (Economic
Justice for All, #123).
However, citizens must do more than pay taxes. They must be
vigilant in assessing whether tax policies are just and equitable.
Fundamental to whether taxation policies are just and equitable is
the question of whether taxes are assessed according to one's
ability to pay (Mother and Teacher #132).
But it does not follow that taxes are always the answer. The
church also teaches that businesses have a right to "an
institutional framework that does not penalize enterprises that act
responsibly.... Managers and stockholders should not be torn
between their responsibilities to their organizations and their
responsibilities toward society as a whole (Economic Justice for
Taxes in Wisconsin
Taxes in Wisconsin are generally higher than those of other
states. This in part reflects a tradition sustained over the last
century by leaders of both major political parties that Wisconsin
should "go the extra mile" in providing services to citizens of
even modest financial means.
Questions for Candidates
1. Do you support policies that base a citizen's tax burden on his or her ability to pay?
2. What factors will you consider in judging the fairness of Wisconsin's tax system?
3. What factors will you consider in determining whether taxes are too high or government is spending too much?
4. What programs will you seek to protect from budget cuts if government services must be reduced to help resolve the state's budget deficit?
5. Will you work to maintain the tax-exempt status of churches and not for profit groups that serve the needy?
Those who argue that taxes are too high express concern that
they will inhibit economic development. They point to other states
with lower taxes.
They point out that the income tax generates most of our state's
revenue. They also cite data that indicates upper income tax payers
pay a substantial part of the income taxes in Wisconsin. They go on
to argue that tax cuts will not significantly change that
distribution of tax burden.
Those who disagree with this analysis observe that focusing on
state and local taxes fails to include user fees, other assessments
on taxpayers, and federal support for state programs that rightly
belong in any effort to measure the cost of government. When these
other sources are added, they point out, Wisconsin's ranking falls
from 3rd to 20th.
Wisconsin's also ranks 20th when one measures not taxes, but
actual government expenditures per $1,000 of personal income. They
argue that comparisons with other states will produce different
results depending on the point of reference.
Others argue that Wisconsin's quality of life and tradition of a
high level of services has benefited the state. They note that our
state's tax burden is similar to that of Minnesota and that our tax
rates did not prevent Minnesota and Wisconsin from growing in
population at a faster rate than other midwestern states.
Budget Shortfall in General Fund
Currently, Wisconsin taxpayers provide the state government with
just over $10 billion a year in general tax revenues. At the same
time, the state is committed to spending just over $11 billion
annually on programs funded by these same general taxes. Clearly,
addressing this $1 billion "structural deficit" between what the
state spends and what it generates in revenue must be a priority
for anyone committed to the common good.
This promises to be difficult. Nearly 85% of general tax dollars
are concentrated in a handful of important but costly programs.
Cutting large amounts of money from any creates a new set of
For example, nearly half of general tax revenue is returned to
local governments to reduce their need to levy property taxes.
Thus, cuts in spending on schools or shared revenues will increase
pressure on local governments to raise property taxes. Cutting the
corrections budget may lead to cuts in training programs that help
prevent inmates from "re-offending" when they are released. Cuts in
programs to the needy exacerbate the pain and a hardship of the
Related to this issue is the impact of tax policy on tax-exempt
property such as that owned by churches and religious groups. To
the extent that government support for programs targeted to the
needy retrenches, more demand may be placed on faith-based groups
to make up the difference.
Moreover, some have suggested that tax-exempt entities pay fees
or taxes for certain local services. Thus it may become important
to remind people that not for profit entities contribute a great
deal to the community because they are able to operate and provide
necessary services without meeting a tax burden. Schools,
hospitals, shelters, group homes, and other programs run by
religious charities and others save Wisconsin taxpayers hundreds of
millions of dollars annually.
-- Next: Corrections