Wisconsin, the state that gave the nation low-calorie beer, has come up with a now answer to the fat-is-unfavorable-in-government fad: It has decided to stop collecting state income taxes for two months.
Gov. Lee S. Dreyfus, a newly elected maverick Republican, calls it "a vacation from taxation."
When hw first proposed the idea last fall, it was loudly denounced as a simplistic campaign gimmick. "It had never been done. Therefore, people said it couldn't be done," he recalled in his office the other day. "The intellectuals, the press and everyone in government was against it. They said it was an irresponsible cheap short."
"But now it's a fact," gleefully adds Dreyfus, who wears a red vest as his political trademark. "Wouldn't it be neat if you could do it every year?"
That's the big trouble with vacation from taxation. It is only going to come once - in May And June of this year.
Beginnig May 1, the state income tax machinery will simply stop, cold turkey. Employers will quit withholding any money from paychecks. The $475 million it has in the bank.
Paychecks will suddenly be larger. A taxpayer with family of four and a $5,000 income will have an extra $190 to spend during the eight weeks; one with a $10,000 income will have an extra $498, one with a $40,000 income, and extra $703.
The moratorium, part of the largest tax overhaul package in Wisconsin history, is actually little more than a sexy alternative to a convetional tax cut. But it has so much popular appeal here that only four members of the Democrat-controlled legislature dared vote against it.
More importantly, the moratorium and the tax package approved with it are an answer to the same pressures that brought on Proposition 13 in California, and the antitax, antispending issues that have dominated the nation's political dialogue in recent months.
Nationwide, the issue has created deep division at all levels of government, setting Democrats against Democrats, Republicans against Republiccans, and state officials against federal ones in a bitter debate over government financing.
most attention has focused on the federal government. "The people are feeling as strongly against the federal government now as they did about the government of England at the time of the Revolution," Gov. Albert Quie of Minnesota warned recently.
The tax and revenue picture in most states fluctuates widely. During the last years, they've found themselves in the embarrassing position of having money on their hands - although a recent study for the Joint Economic Committee of Congress noted the surpluses weren't "all they're cracked up to be."
Their response has been a round of tax cutting schemes.
In 1978, 21 states cut taxes in one way or another, according to the Tax Foundation, a respected nonpartisan research group. As of mid-February this year, 37 states were considering additional cuts.
Wisconsin is a good case in point.
It is one of five states with a huge tax surplus. The others are California with $2.5 billion surplus, Washington and Maryland with a $300 million surplus each, and Texas with $751 million surplus.
Last year, Dreyfus, ex-chancellor of the Stevens Point campus of the University of Wisconsin and a longshot candidate for governor, seized on the surplus issue, and made a tax moratorium the corgerstone of his campaign.
It was "sinful," he said, for the state to be taking tax money from "people who are out there borrowing money from Household Finance to make ends meet while the state has $476 million in the bank."
The surplus, Dreyfus proclaimed, "is like The Blob. . . .The only way to kill it is to cut off its energy source, and that means stopping taxes."
Democrats, who controlled every major statewide office, responded with proposals to cut property taxes. But Dreyfus won, decisively upsetting acting Gov. Martin J. Schreiber.
By Christmas, it was clear Wisconsin would get some kind of tax cut.The question was only what kind. Democrats in the legislature struck first, offering a package heavy with property tax relief. Dreyfus followed several weeks later with his request for a three-month tax holiday.
A compromise settlement was quickly negotiated. It sailed through both houses of the legislature with almost no opposition. "I was almost sorry to see it go," said one top Dreyfus aide. "If they'd resisted, we could have used the issue forever."
The compromise called for $942 million in tax cuts over two years, and major changes in the tax stucture. Dreyfus' tax holiday was reduced to two months. Democrats got a realignment of income tax brackets, and a smaller deduction in property tax relief than they'd sought.
In percentages, the largest cuts went to low-income taxpayers. Reductions totalled 80 percent for some people in the $5,000 income range, cimpared with 10.7 percent for those in the $30,000 bracket.
Dreyfus also won approval of a plan to turn the state budget process upside down. Traditionally, states pass revenue and appropriations bills at the same time so they can be adjusted to fit one another. Here, however, the revenue raising bill was passed alone for the first time, in effect setting a ceiling on how much money the state has to spend.
Bothe sides claimed victory. "The governor won the sex appeal contest, but we got the lion's share of policy," House Speaker Ed Jackamonis, a Democrat, said in an interview. "I think we won."
"I guess Dreyfus is seen in the public mind as the winner," he added. "He's going to get more credit than he deserves. But we're going to be out there trying to claim all we can."