The Journal Sentinel Editorial Board almost got it, or the Beginning of a Debate on Tax Policy

In an op-ed yesterday, the Journal Sentinel Editorial Board came tantalizingly close to understanding the problems with Wisconsin's excessive taxation and budget woes.
As state government hopscotches from one fiscal crisis to the next, it's hard for legislators to look beyond the next budget cliff. But look they must: Wisconsin is about to fall over.
Simply put, the state relies way too much on personal income taxes and the property tax to plug budgets. And these revenue streams will begin drying up as the state's population ages. Acting now to reform the tax system will make the transition easier....
The challenges are coming into sharp relief. Hardly any other state hits the middle class harder with property and state income taxes, Umhoefer reported.
A two-parent family of three earning $75,000 a year and living in a median-priced home in Milwaukee would pay about $7,500 in local property and state income taxes, he found. In Chicago, they would pay $5,300; in Des Moines, $5,000.
Yes, the state's overall tax burden does appear to be lighter than in the past. Wisconsin now ranks 14th in total tax burden, a big decline from just a few years ago. But the state's tax system is loaded with inequities.
While homeowners are socked with one of the highest property taxes in the nation, industrial property owners generally rank in the bottom half, sometimes the bottom third, nationally. With personal income essentially flat-lining in Wisconsin, this is burdensome and unfair.
The editorial is great until this point. The property tax disparity between our neighbors is dangerous economically. Our overall tax ranking has dropped not because our taxes have been cut, but because other states have raised their taxes faster and higher than us.

The Journal Sentinel is right to point out inequities but the solutions they eventually point to are a mixed bag at best. (After the break I offer my take on their solutions, for what it's worth.)

• Government efficiency. The state should encourage local governments to combine some of their operations, and if encouragement doesn't work a mandate should be looked at. While total spending at all levels of government ranks in the middle of the 50 states, there is no question that Wisconsin's many layers of government could be streamlined.
Great starting point, but let's go beyond streamlining and talk about cuts and the elimination of waste.
• Honest budgeting. In the past budget cycles, the Legislature has used every trick in the book to close gaping holes. Yet, even then, the state is still running a deficit if forced to consider future commitments. At some point, these commitments will come due.
Excellent. I've been arguing for this for at least 3 years since my column at the Herald. But then we hit a few bumps.
• User fees, including toll roads. The Wisconsin Way envisions user fees even for police and fire protection as a way to meet its goal of reducing property taxes by 25%. Tolls on some interstates could generate dedicated income for roads and capture revenue from out-of-state drivers. It's worth a look.
• Make the property tax more equitable. Over the years, the burden has been shifted from industrial property owners onto homeowners. The Legislature should consider ways to create a more balanced flow of revenue.
• Tap the sales tax. The sales tax has its disadvantages - it hits lower-income taxpayers relatively harder and it's more volatile since it depends on the economy - but it also has the benefit of capturing revenue from visitors. The state is now 40th in gross receipts and sales taxes. There is room to grow, particularly for transit.
• Lean on Wisconsin's congressional delegation. Wisconsin ranked a dismal 47th among all states in 2007 in the amount of federal dollars it received. The state simply must win its fair share.
These last four points are just bad policy. The idea of toll roads may look promising at first, but we should not undertake any policies that increase the costs of moving freight and thereby restricts manufacturing in the state. We've lost too many manufacturing jobs as it is. The same goes for making the property tax more "equitable." The solution is not raising taxes on businesses, but finding ways to cut the property taxes paid by individuals - which likely means budget cuts. The sales tax is too volatile and would only harm those who can least afford it. Unless there were to be corresponding cuts in the income and property taxes. The final point is ridiculous. Bellying up to the trough and robbing Peter to pay Paul is no solution to our fiscal problems. Relying too much on the federal government for our own budget puts our own fiscal security in someone else's hands. Not too mention that we have too much of that going on nationally anyway.

The Journal Sentinel nails the problem: We have an oppressive and unfair tax system in Wisconsin. They bring up a couple of good ideas at first, but fall back quickly to typical liberal arguments about tax "fairness" and "new revenue streams." Still, they are at least recognizing the problem, and we all know that is the first step to recovery. Going into November, let's hope that the debate is full-throated and vigorous.