Wisconsin Withdraws Plan for $15 Billion Tax Hike; Debates $1 Billion Tax Hike

Democrats in Wisconsin’s state legislature have dropped their demand for a $15 billion tax hike to pay for a universal health care system, if Republicans will agree to impose $1 billion in taxes on hospitals and cigarettes. The proposals are part of the delayed state budget, which was due back on July 1.

The health care proposal would have expanded the existing state low-income system to cover 98 percent of the state’s residents. Back in June, we noted that paying for it would have required a 100 percent tax increase, making the combined federal-state tax burden in Wisconsin a whopping 41.8 percent. It also would have been the largest tax increase enacted by any state, and would have moved Wisconsin to #1 in state tax burdens (up from #7).

Putting aside the efficacy of taxing hospitals as a way to increase medical care, the proposed $1.25-a-pack cigarette tax surpasses even the federal $1-a-pack tax proposal we discussed here. There, we show how the tax hits the poor the hardest, and violates principles of sound tax policy.

More on cigarette tax evasion here.