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Sales Tax Falls Flat

February 18, 2009
Yearly State and Local Sales Tax Receipts (courtesy of Mish's Global Economic Trend Analysis)

Yearly State and Local Sales Tax Receipts (courtesy of Mish's Global Economic Trend Analysis)

In rosier times Scott Walker’s sales tax holiday would still be met with criticism, but when the average consumer is tapped out and frantically trying to pay off debt, Walker’s proposal rings hollow with an irresponsibility that is simply astounding.  How irresponsible?  The stimulus legislation would have to be re-written for Walker to get his way.

As the chart above shows on a national level, we’re receiving less revenue from sales tax collection at a time when our budget deficits all around the country are growing.   Accepting the fact that the state’s expected return on $3.2 billion in tax cuts is less than $1 for every $1 spent, we would be left with an even larger hole in the state budget for 2010.   We would be wasting the money the federal government had given us and only have larger problems next year.

Walker is looking at this issue from a purely political perspective and, fortunately for him, there are a lot of people in Wisconsin that are happy to ignore reality.

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