Lawmakers included four major tax cuts in the 2015-17 budget, at the same time as they were limiting resources for critically important institutions like the University of Wisconsin system and public schools. When fully implemented, the tax cuts will reduce tax revenue by more than $250 million a year.
The four tax cuts include:
#1: Increasing the school levy tax credit.
Cost: $211 million in 2015-17 ($105.5 million per year)
Lawmakers increased the size of this tax credit paid to municipalities. Municipalities must then pass the money through to property owners in the form of lower property taxes.
Only about half the school levy tax credit lowers property taxes for Wisconsin residents on their primary homes. That means a large part of the remainder reduces property taxes for owners of commercial and industrial property and out-of-state owners of vacation homes.
The higher the value of the property, the greater the school levy tax credit is for property owners within an area. Read more
Wisconsin lawmakers on the legislature’s budget committee will probably meet this week to make decisions about a proposed income tax cut for high earners and other changes to Wisconsin’s tax system, among other issues. They should keep in mind that new evidence shows that no state that passed large income tax cuts in recent years has seen its economy grow faster than the national average. Read more
Under Proposal to Eliminate the Alternative Minimum Tax, Only Highest Earners Would Receive a Significant Tax Cut
Lawmakers have proposed eliminating Wisconsin’s Alternative Minimum Tax, a change that would give a tax cut to some people with high incomes and exclude nearly all taxpayers with incomes under $100,000. The legislature’s budget committee is likely to vote on the proposal next week. Read more
More evidence is piling up that states that made big tax cuts in recent years – including Wisconsin – are failing to keep up with the rest of the country when it comes to job growth. Read more
One of the positive aspects of the Governor’s budget proposals is an investment in Department of Revenue positions to increase tax compliance and improve collection of state and local debts. But despite the fact that those additional positions will yield a tremendous return on the investment, some conservative legislators have balked at providing more staff for DOR. The issue may be debated in the Joint Finance Committee (JFC) this Thursday or Friday, May 29 or 30. (Update: JFC consideration of the DOR issues have been postponed until June 2.) Read more
There’s been a lot of talk in Wisconsin over the last couple of weeks about the need to ensure that tax breaks and loans awarded by Wisconsin’s economic development agency are limited to businesses that are creating jobs and fulfill their job growth commitments. Yet almost no attention has been paid to the fact that the state’s largest tax credit for corporations is ballooning in cost and is distributed to businesses operating in Wisconsin regardless of whether they are expanding or slashing their workforce in our state. Read more
The Joint Finance Committee will vote Thursday on whether to divert more funds from the federal welfare reform block grant to help finance unrelated parts of the state budget. The amount of those funds transferred to the Department of Revenue (DOR) has already been increased dramatically in each of the last two budgets. $62.5 million per year from the Temporary Assistance to Needy Families (TANF) block grant is being used to replace state funding for the Earned Income Tax Credit (EITC), and that maneuver reduces the funding available for important programs to assist vulnerable low-income families.
According to a Legislative Fiscal Bureau paper (#215) , federal law would allow the state to transfer up to $12.3 million more to DOR in the next biennium, in order to back out state General Fund dollars for the EITC.
Optimally, legislators should decrease the use of TANF funding for the EITC, which is what the Department of Children and Families (DCF) proposed last fall in the budget request they submitted to the Department of Administration. Read more
Wisconsin’s property tax credit for low-income homeowners and renters is declining because – in contrast to most of the rest of the tax code – it isn’t adjusted for inflation. New figures released last week by the Legislative Fiscal Bureau (LFB) show the credit is falling even faster than the Governor’s budget assumed, and the following chart illustrates the decline.
Lawmakers hoping to avoid some of the damaging budget cuts proposed by Governor Walker had pinned their hopes on tax revenues coming in higher than originally anticipated, thereby boosting the resources available to invest in Wisconsin’s schools, communities and workforce.
However, new estimates released today show no increase in tax revenue over the original projections.
That news is sure to put key GOP legislators in a bind, especially ones who have indicated they would like to undo some of the damaging cuts in the Governor’s budget and make budget changes that have strong public support. The legislature’s budget committee even postponed their deliberations last week, hoping for news of higher-than-anticipated tax revenues. That hope has now been dashed.
Fortunately, there is another way to build a budget that invests in Wisconsin and avoids the worst of the cuts proposed by Governor Walker, even without higher than anticipated tax revenue.
By reallocating resources and avoiding new tax cuts, legislators can support Wisconsin’s excellent public schools, a university system that drives innovation, and a healthy workforce. Read more
Today is April 15th, the deadline for most people to file their income tax forms without penalty. 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. We should focus on making sure we have the resources we need to invest in the building blocks of job creation and economic growth. Read more