A Tale of Two Tax Credits: Lawmakers’ Priorities for Property Tax Cuts Favor Wealthy
Only half the value of a property tax cut proposed by Governor Walker would go towards reducing property taxes for Wisconsin homeowners on their primary residences, according to a new analysis from the Wisconsin Budget Project.
Governor Walker has proposed a $211 million increase over two years for a property tax credit whose beneficiaries include profitable corporations, wealthy individuals, and Wisconsin property owners who live out of state. The Wisconsin Budget Project analysis shows how $103 million, or 49%, of the increase in the School Levy Credit would go towards boosting the bottom line of businesses and corporations, reducing property taxes for owners of second homes, cutting taxes for people who live outside of Wisconsin, and other purposes that wouldn’t help keep property taxes affordable for most Wisconsin homeowners .
“If lawmakers want to cut property taxes for Wisconsin homeowners, this not a cost-effective way of doing it,” said Tamarine Cornelius, an analyst with the Wisconsin Budget Project. “It would be far more efficient for lawmakers to prioritize tax cuts aimed at Wisconsin residents who pay high property taxes relative to their incomes.”
The proposal to increase the School Levy Credit stands in contrast with the legislature’s reduction of the Homestead Credit, a property tax credit designed to keep taxes affordable for people with low incomes. The Legislature has frozen the formula used to calculate the Homestead Credit so it cannot be adjusted for inflation, and as food prices and other living costs rises, the credit loses value, fewer people are eligible for the credit, and the amount of property taxes paid by seniors and working-class families and individuals rise. The value of the Homestead Credit has fallen by 23% over the last decade, and the number of people benefitting from the credit has sunk to its lowest point in a decade.
“A better way to cut property taxes would be for lawmakers to undo the property tax increase on people with low incomes,” said Cornelius. “That would mean removing the freeze from the formula that calculates the Homestead Credit and allowing it to rise with the cost of living.”
The Wisconsin Budget Project is an independent Madison-based research group that focuses on tax and budget policy.
The new analysis is available on the Wisconsin Budget Project’s website.