Proposed Changes to Transportation Finance Camouflage Tax Increase on Gas

Friday, May 12, 2017 at 5:44 AM by

State lawmakers have proposed changes to the way gas is taxed that would result in buyers paying more in taxes for each gallon of gasoline purchased.

The tax increase is part of a broad package proposed by Assembly Republicans that also includes raising the vehicle registration fees for some car owners, allowing counties to add a 0.5% sales tax to fund local roads, and directing the Wisconsin Department of Transportation to ask for an exemption from federal requirements that bar new toll roads. The transportation package is paired with a package of income tax cuts that would give extremely large tax breaks to earners with the highest incomes, while shutting out Wisconsin residents with low incomes (see New Income Tax Proposal Overwhelmingly Favors Highest Earners, May 2017).

Rather than increase the gas tax directly, lawmakers have proposed decreasing one tax and increasing another, in what seems to be an attempt to mask the fact that consumers would pay more in taxes when they buy gas. Read more

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New Income Tax Proposal Overwhelmingly Favors Highest Earners

Thursday, May 11, 2017 at 8:02 AM by

Republicans in the Wisconsin Assembly have proposed a package of tax cuts that would give extremely large tax breaks to earners with the highest incomes, while shutting out Wisconsin residents with low incomes.

The tax package has multiple components, the largest of which is the gradual flattening of the state’s income tax rates. The proposal would reduce income tax rates over ten years to a flat rate of 3.95%. Currently, the bottom income tax rate is 4.0% and the top marginal rate is 7.65%, so the proposal would result in a 0.05 percentage point reduction in the tax rate for income in the bottom bracket, and a 3.7 percentage point reduction for income in the top bracket.

Wisconsin’s income tax system as it currently stands is progressive, meaning that taxpayers with higher incomes pay a higher share of their income in taxes. The progressive nature of the state’s income tax partially – but not completely – offsets the regressive nature of the state’s sales tax and property tax. Read more

Categories: 2017-19 biennial budget, Blog, income taxes, STATE BUDGET, STATE TAXES | Comments Off on New Income Tax Proposal Overwhelmingly Favors Highest Earners

Wisconsin Left with Little to Show for Nearly Eliminating Requirement that Manufacturers Pay Income Tax

Wednesday, May 3, 2017 at 7:40 AM by

The number of manufacturing jobs in Wisconsin has grown more slowly than the national average, despite a major new tax break that nearly wipes out income taxes for manufacturers.

The number of manufacturing jobs in Wisconsin grew by 1.4% between September 2013 and September 2016, less than the national rate of 2.1%. These figures are based on the Quarterly Census of Employment and Wages, the “gold standard” measure of jobs figures. September 2016 is the most recent month for which jobs figures are available from the QCEW; that month’s figures are preliminary. The manufacturing tax break started with tax year 2013 and was phased in over a four-year period.

Manuf-jobs

The slow growth of manufacturing jobs in Wisconsin is notable because over that same period Wisconsin gave manufacturers a tax break worth $457 million, through a tax credit that nearly wipes out income tax liability for manufacturers and some other businesses. But lawmakers didn’t require manufacturers to create any jobs to receive the tax break – in fact, even manufacturers that are laying off employees or sending Wisconsin jobs overseas can receive the tax cut. Read more

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Negative Effects of the House Health Care Bill Keep Expanding

Tuesday, May 2, 2017 at 3:17 PM by

[UPDATE — This post was revised on May 3 to reflect the new position of Congressman Fred Upton, who has authored an amendment that might secure enough votes for House passage of the bill on May 4.]

Passage of the House plan to repeal and partially replace the Affordable Care Act (ACA) would make sweeping changes that negatively affect most Americans. Yet some opponents of the ACA have made the mistaken or disingenuous argument that few people would be affected.

Governor Walker, for example, told reporters on March 8 of this year that repealing and replacing the ACA with Speaker Ryan’s plan would only affect a small percentage of Wisconsinites:

“Most people aren’t going to be affected by this no matter what happens because if you get your health insurance from your employer, which is almost everybody here and almost everybody in this state, nothing changes.”

That assessment was flawed at the time, and since early March it has steadily become more apparent that most Wisconsinites could be adversely affected. Read more

Categories: Blog, federal issues, health care reform, Medicaid | Comments Off on Negative Effects of the House Health Care Bill Keep Expanding

Wisconsin Lawmakers Indicate a Willingness to Take Money from Education and Health Care to Fund Highways

Thursday, April 27, 2017 at 11:18 AM by

Governor Walker and other state lawmakers have said they are open to redirecting money from a pot intended to support education, health care, and safe communities, and using the money for roads instead. That approach could lead to future budget cuts that damage academic opportunities for Wisconsin schoolchildren, lengthen the amount of time to graduation for University of Wisconsin students, and make it harder for communities to afford important services like trash collection and street cleaning.

State road projects are funded with resources from Wisconsin’s Transportation Fund. About a decade ago, state lawmakers froze the gas tax on each gallon of gas sold – the main source of revenue for the Transportation Fund – and inflation has eaten away at the tax’s value since then, shrinking the amount of resources available to build and maintain Wisconsin’s transportation network. The result is that there is not currently nearly enough money coming into the Transportation Fund to pay for all the highway projects lawmakers want. Read more

Public Money for Private Schools Gets a Boost in Governor Walker’s Budget

Tuesday, April 25, 2017 at 9:25 AM by

Governor Walker has proposed significantly increasing resources for Wisconsin’s public schools, a move that has gotten a great deal of attention – and has attracted some controversy for the size of the increase. But his budget also includes a major increase in the amount of public money that goes to pay for private school tuition, a fact that has been mostly overlooked.

Through the state’s private school choice program, Wisconsin uses publicly-funded vouchers to pay tuition at private schools across the state. To participate in the program, students must have family incomes of up to 300% of the poverty level if they live in Milwaukee or Racine (about $73,000 for a family of four) or of up to 185% of the poverty level if they live in the rest of the state ($45,000 for a family of four). About 36,000 students are expected to receive publicly-funded vouchers to pay for private school tuition next year. Read more

Categories: 2017-19 biennial budget, Blog, EDUCATION, K-12 | Comments Off on Public Money for Private Schools Gets a Boost in Governor Walker’s Budget

Wisconsin Schools Benefit Greatly from Federal Medicaid Funds

Monday, April 24, 2017 at 4:02 PM by

House Plans to Cut Medicaid Would Jeopardize Critical Health Services for Students

Wisconsin schools have a lot at stake in the debate about federal support for Medicaid. Even though Wisconsin ranks 19th nationally in the size of its school-age population, our state ranks 7th highest in federal funding for Medicaid services provided by schools.

According to a new report by the Center on Budget and Policy Priorities, Wisconsin schools received more than $187 million for Medicaid services in 2015, including more than $107 million in federal Medicaid funds. That amount is higher than in all but six other states, despite the fact that Wisconsin ranks near the bottom in total Medicaid spending per child. These figures indicate that Wisconsin schools have done a good job of utilizing federal assistance to support school-based health services.

Medicaid provides health care for more than 1.1 million Wisconsinites, including about 500,000 children, but many people are unaware of its significance for schools. Read more

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High Cost, Little Benefit to Tax Gimmick Under Consideration

Thursday, April 20, 2017 at 7:39 AM by

Governor Walker has proposed a back-to-school sales tax holiday, a gimmick that would reduce the resources available to support Wisconsin’s schools, university system, and communities, without providing any real economic benefit.

Under the proposal, purchases of school supplies, computers, and clothing would be exempt from the sales tax for one weekend in August. This move would cost the state an estimated $11 million a year in lost tax revenue, and local governments an additional $750,000 a year in lost revenue. This reduction in revenue would make it harder for Wisconsin to make the kinds of investments in education, health, and workforce systems that can spur economic growth.

A sales tax holiday would do little to boost consumer spending or give a tax break to Wisconsin families with low incomes. There are a whole host of downsides to a sales tax holiday, including:

  • Instead of encouraging consumers to spend more money, sales tax holidays simply shift the timing of the spending;
  • A sales tax holiday on back-to-school items involves lawmakers picking winners and losers among types of goods that should be exempt from the sales tax;
  • Sales tax holidays are not an effective tool for giving a tax cut to individuals with low incomes, since a large amount of savings is also given to people in higher income groups as well.
Read more
Categories: 2017-19 biennial budget, Blog, sales tax, STATE BUDGET | Comments Off on High Cost, Little Benefit to Tax Gimmick Under Consideration

Governor Proposes Expanding Tax Credit that Encourages Work and Improves Children’s Opportunities

Tuesday, April 18, 2017 at 6:54 AM by

Governor Walker has proposed increasing the state’s Earned Income Tax Credit for some families, a move that would improve child well-being and expand economic opportunity for families with low and moderate incomes. He included the measure in his proposal for the budget period that runs from July 2017 to June 2019.

Expanding Wisconsin’s EITC would give a much-deserved break to working parents with low and moderate incomes. The EITC lets working families keep more of what they earn to help meet basic needs and pay for things that allow them to keep working, such as child care and transportation. This tax credit offers working parents a hand up by encouraging and supporting work. It’s a modest investment that can make a big difference in the lives of families.

The EITC also boosts local communities and economies across the state. It puts more money in the pockets of low-wage workers, who then spend it at local businesses to pay for things like groceries and child care. Read more

Categories: 2017-19 biennial budget, Blog, EITC | Comments Off on Governor Proposes Expanding Tax Credit that Encourages Work and Improves Children’s Opportunities

To Build a Strong Economy and Create Jobs, Invest in What Works

Monday, April 17, 2017 at 8:07 AM by

Tomorrow is April 18th, the deadline for most people to file their income tax forms without penalty. (April 17 is a holiday in Washington, D.C., pushing off the deadline for filing until today.) We hear a lot of negative messages about taxes on this day.  But this Tax Day, let’s remember that creating jobs and building broad-based prosperity requires investing in what works – and we can’t do that without taxes.

To build a strong Wisconsin economy, we need to invest in assets that help businesses thrive and help hard-working people climb into the middle class. That means Wisconsin needs to continue our tradition of supporting high-quality schools and preschools, an affordable university system, a healthy workforce, and a clean environment.

Taxes make these investments possible.

When state lawmakers cut income taxes for the wealthy or for corporations, we undermine our ability to support important services that Wisconsin businesses and residents rely on every day.  Read more

Categories: Blog, income taxes | Comments Off on To Build a Strong Economy and Create Jobs, Invest in What Works