A study released Tuesday by the Wisconsin Policy Research Institute predicted that an increase in state income or sales tax could completely offset the projected budget deficit, but would also cost thousands of jobs.
According to a report in the Wisconsin State Journal, the study placed the deficit at $1.6 billion for the first year of the 2003-2005 budget. State analysts have estimated the deficit at $2.6 billion over the biennium, while Gov. Jim Doyle has placed the number closer to $4.3 billion.
A raise in state sales tax from 5 to 7.4 percent would balance the first year's deficit, as would a 2 percent increase in personal income taxes, the study showed. Yet the sales tax increase would cost over 55,000 jobs, and the income tax increase about 84,000 jobs, as employers lay off workers rather than expand wages to match the tax increase.
