March 5, 2019
Everyone in Wisconsin deserves the opportunity to fully benefit from the state’s economic growth. Our economy, our communities, our schools, and our families will fare better when every person in the state has full access to opportunity.
But Wisconsin’s economic growth has been lagging behind most other states in recent years, and the gains from that growth are not being widely shared. A growing concentration of income is being held in the hands of the top 1%, and too many Wisconsin residents are finding it difficult to get ahead or are living in poverty. Making ends meet and climbing out of poverty are particularly challenging for Wisconsinites in rural areas and communities of color.
The increasing concentration of income and wealth creates a significant impediment to robust and sustainable economic growth. Federal Reserve Chairman Jerome Powell recently said that “The U.S. lags now in mobility” (relative to upward mobility in other countries), and he warned that income inequality is the nation’s biggest economic challenge in the coming decade.
For our state’s economy to work for everyone, Wisconsin needs to invest in healthy communities, working families, and public infrastructure across the state. We also need a tax system that provides a level playing field for Wisconsin families and businesses, rather than a structure that advantages the well-connected who rig the system for their own benefit.
Here are four key strategies for enabling Wisconsin to move forward on a path to shared prosperity.
#1 Invest in healthy and well-educated workers and communities
Wisconsin’s economic success has long been rooted in having a healthy, well-educated workforce. For much of our state’s history, Wisconsin has been a national leader in providing access to health insurance and also a leader in investing in a high quality public education system. However, in recent years, Wisconsin has been slipping in its commitment to these critical foundations of our state’s prosperity.
Working families need great schools. In order for Wisconsin to have a well-educated workforce with skills that match current and future needs, we need high quality early learning, excellent public schools and affordable, accessible higher education.
Wisconsinites need quality, affordable health insurance coverage to be healthy and productive, and to have the economic security that they won’t go bankrupt because of a medical emergency.
Too often in Wisconsin, a person’s health depends on their zip code, race and ethnicity, or income level. We need to make sure that everyone can see a doctor when they need one, regardless of where they live, the color of their skin, or how much they have in their bank account.
To give all Wisconsinites an opportunity to succeed and to build a stronger foundation for our state’s future economic success, Wisconsin policymakers need to:
- Give young children a strong foundation: Increase our state’s investments in early education and help parents understand their children’s developmental capabilities. These are important and cost-effective strategies for helping children succeed, enabling parents to participate in the workforce and combating racial disparities.
- Improve K-12 education: Boost support for public schools by raising school spending caps and significantly increasing school aid, particularly special education aid. In addition, increase funding for poorer districts with less capacity to generate property tax revenue, and districts that are struggling to finance fixed costs as enrollment has declined.
- Enhance access to higher education: Increase higher education financial aid, and lift the prohibition of in-state tuition for students who grew up in Wisconsin and graduated from Wisconsin high schools, and are undocumented.
- Improve access to quality, affordable insurance: Expand eligibility for BadgerCare (Wisconsin’s health insurance coverage for low-income families) to include adults up to 138% of the federal poverty level, and eliminate barriers to BadgerCare participation that keep Wisconsinites from getting the care they need to be able to be get and retain jobs.
- Protect BadgerCare coverage of kids: Repeal statutory provisions (currently blocked by federal law) that could cause more than 20,000 Wisconsin children to lose their BadgerCare coverage.
- Protect coverage for people with pre-existing conditions: Block the expansion of health plans that are exempt from the Affordable Care Act’s consumer protections.
#2: Make work pay and uplift working families
Wisconsin workers should be able to support their families, put food on the table, and make ends meet. But we have let protections for workers and potential workers erode, instead favoring corporate handouts over common-sense reforms that support workers and boost the economy.
With the state facing a labor shortage, Wisconsin policymakers need to remove impediments to work and ensure that employment supports working families. Barriers to employment—such as not having access to quality child care, reliable transportation, and affordable health care—are suppressing Wisconsin’s growth and exacerbating the severe economic and racial disparities in our state.
Wisconsin should be a great place to raise a family, for people of all races. But research shows that Wisconsin is one of the worst places in the country to raise a black child, and other families of color are shut out of opportunity as well. Too often state leaders have failed to engage with Wisconsin’s communities of color and to advance policies that promote racial justice.
To improve the economic security of Wisconsin families, create a larger and stronger workforce, and build a more robust state economy, state policymakers need to take the following steps:
- Increase the minimum wage: Significantly increase the minimum wage and establish a mechanism for it to be automatically adjusted each year for inflation.
- Increase and expand the state’s Earned Income Tax Credit (EITC) for low-wage workers: Create a state EITC for adults who are not custodial parents and increase the credit for working parents.
- Provide family and sick leave: Require paid leave (family and sick leave), or at least roll back state preemption of local ordinances relating to employee benefits and compensation.
- Improve access to child care: Reverse the cuts made over many years in the funding for the child care subsidy program and allow reimbursement rates to catch up to marketplace rates. Too many parents are now unable to find quality child care providers who participate in the subsidy program.
- Engage diverse communities: Actively engage communities of color and provide them with seats at decision-making tables in order to begin addressing the injustices that they have long faced in our state.
- Limit the practice of suspending driver licenses for low-income Wisconsinites who are unable pay fines and forfeitures: End suspensions for offenses unrelated to driving, waive reinstatement fees, allow and encourage judges to use alternative sanctions, and authorize the issuance of occupational licenses.
- Take a strong stand against wage theft and wage discrimination: Enact and enforce a strong wage theft prevention law similar to the ones enacted in California and Maryland in recent years.
- Authorize driver licenses for undocumented immigrants: Allow all immigrants to obtain licenses in order to help businesses connect with workers who have skill sets that match employer needs, while also making Wisconsin highways safer and yielding insurance savings for a broad pool of drivers.
#3: Strengthen Wisconsin’s infrastructure and communities
Our economy is only as strong as the communities within it. We need to aggressively pursue strategies to make sure that all our communities can thrive and attract new residents and businesses—from the rural towns in the northwest to central Milwaukee and everywhere in between. That means making sure that rural communities aren’t left behind as we shift to high-speed internet, and that residents have access to safe, affordable housing no matter where they live.
- Promote safe, affordable housing: Support local efforts to address the dangers posed by lead paint and pipes; strengthen the Homestead Tax Credit that enables homeowners on fixed incomes and low-wage workers to stay in their homes; and restore and expand renters’ rights by turning back changes made since 2011 in state housing law that hurt vulnerable Wisconsin residents.
- Provide adequate resources for communities: Increase revenue-sharing in order to help local communities have the resources they need to invest in infrastructure and services and remain economically vibrant.
- Connect rural communities to high speed internet: Invest in partnerships to expand access in underserved areas and expand the use of telecommunications cooperatives to provide internet services to help rural communities avoid being left behind.
- Support a dependable transportation network: Increase investments in road repairs across the state and in public transit services, rather than paying for highway expansions demanded by Foxconn.
#4: Close tax loopholes that favor big corporations and the well-connected
Public resources should be invested in a way that broadly benefits everyone in Wisconsin. But in recent years, state lawmakers have passed a collection of tax breaks that funnel money into the pockets of a small number of wealthy, well-connected individuals and big corporations who rig the system for their own benefit.
The following changes would clean up Wisconsin’s tax code and restore millions to invest in crucial priorities our communities need:
- Repeal the Manufacturing credit: End or substantially scale back this runaway tax break, which primarily benefits a very small number of rich Wisconsinites and which is not limited to businesses that are creating jobs or at least maintaining their employment levels.
- Tax income from wealth the same as income earned form work: Treat capital gains income like earnings from work, which would help create a more equitable tax code and generate revenue needed for the investments that will enable Wisconsin to prosper.
- Limit the Foxconn subsidies to the minimum that we are contractually obligated to pay: Protect state taxpayers from the bloated cost of potential Foxconn subsidies by being sure that the contract is not amended or reinterpreted in ways that would allow the foreign corporation to get huge cash subsidies even if it continues to fail to meet the contract’s terms.
- Restore the alternative minimum tax: Reinstate this tax to ensure that all high-income Wisconsinites pay at least a modest amount of income tax.
Some of the revenue generated by those changes should be used to reverse tax increases made in recent years to now assist low-income Wisconsinites who receive either the Homestead or Earned Income Tax Credits. It’s time for state policymakers to:
- Increase the Homestead tax credit and adjust it annually for inflation: Help fixed-income Wisconsinites and low-wage workers stay in their homes by increasing the size of the Homestead credit and the income ceiling for eligibility in order to offset many years of erosion by inflation, and restore the formula repealed in 2011 that automatically adjusted the formula for inflation.
- Increase and expand the EITC: Increase the EITC for working parents and expand it to include childless adults in order to help make low-wage work pay, promote workforce participation, and promote family wellbeing.
Conclusion
Wisconsin needs to change its policy priorities to achieve greater and more widely shared prosperity. Rather than lavishing tax breaks on the wealthiest corporations and making huge cash payments to a small number of well-connected corporations, Wisconsin needs to go back to what makes us strong — making sound investments in our workforce, our public institutions, and our communities.
For our state to be competitive and prosperous, we also need to do something that we have not succeeded at in the past: resolving the problems created by structural barriers to and making direct investments in opportunity for people of color. Our communities and our economy will be much stronger when every person in the state has full access to share in the state’s progress.
The tools for achieving those goals need not be controversial; they can enjoy broad bipartisan support. Policy changes that will help disadvantaged Wisconsinites become economically secure will also do the most to boost our state’s economic prosperity.