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
Legislators Can Avoid Deep Cuts without Raising Taxes
Wisconsin needs a budget that invests in the building blocks of a strong economy. Healthy families, safe and stable communities, and a well-educated workforce are assets critical to helping Wisconsin remain an attractive place to live, raise families, and do business. By strengthening these resources, the state budget can lay the groundwork for broad-based prosperity and an economy that works for everyone.
Unfortunately, the budget proposed by the Governor makes deep and unnecessary cuts to investments vital to Wisconsin’s long-term economic success. For example, the proposed budget would reduce resources for public education – a cut that would come on top of dramatic reductions in resources that have already occurred. The budget would also make deep cuts in state support for the University of Wisconsin System, giving a tremendous blow to one of the engines of Wisconsin’s long-term prosperity. The proposed budget would also make it harder for people with disabilities to get the help they need to contribute to their communities. Read more
To build a strong economy and broad-based prosperity in Wisconsin, we need to make sure everyone has the chance to thrive economically. But Wisconsin’s tax system is stacked against people with low and moderate incomes, making it harder for those taxpayers to make ends meet or get ahead. Meanwhile, the very richest Wisconsin residents pay a much smaller share of their income in state and local taxes.
Wisconsin’s middle class, once one of the strongest in the country, is shrinking faster than in any other state. That trend should set off alarm bells for policymakers, who should be using the tax system and other tools to help Wisconsin’s middle class grow and prosper. Instead, lawmakers have created a tax system in which middle-income taxpayers pay a much higher share of their income in state and local taxes than do the very richest taxpayers.
Wisconsin taxpayers in the top 1% by income, who earn at least $399,000 a year, pay $6.20 in state and local taxes out of every $100 they earn, on average. Read more
A tax cut that nearly wipes out income taxes for manufacturers is now expected to cost the state more than twice the original estimate, and has reduced resources for Wisconsin’s public schools and university system.
The Manufacturing and Agriculture Tax Credit gradually reduces income tax rates for businesses engaged in manufacturing or agriculture. When the credit is fully phased in in fiscal year 2017, many businesses engaged in those activities will not have to pay any state incomes taxes at all, and others will have their income taxes reduced by at least 95%.
The projected cost of virtually eliminating income taxes for manufacturers and agricultural producers has ballooned since lawmakers passed the measure in 2011. This year, the tax cut is slated to reduce taxes for businesses by $152 million, more than twice as much as was originally estimated. Once the tax cut is completely phased in, the credit will cut taxes for business by a whopping $285 million per year, a price tag $156 million higher than originally expected. Read more
Property Tax Cut Contributing to Deep Budget Cuts Benefits Second Home Owners and Profitable Corporations, Among Others
The budget proposed by Governor Walker includes significant new tax cuts, as well as deep cuts to the University System and public schools to pay for the proposed tax cuts and ones in the past. A new analysis by the Wisconsin Budget Project describes how one of the new tax cuts would do little to lower property taxes for Wisconsin homeowners on their primary residences.
In the budget, Governor Walker has proposed a $211 million increase over two years for a property tax credit called the School Levy Credit. But the way the credit is structured means that an estimated $103 million, or 49% of the proposed increase, 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 do much to lower property taxes for Wisconsin homeowners.
If lawmakers want to cut property taxes, there’s a much better way of doing it that provides targeted relief to people with high property taxes relative to their incomes. Read more
In a misguided attempt to encourage job growth, Wisconsin lawmakers have passed dozens of tax cuts in the last few years. Those tax cuts have a poor track record: they have not done much to improve the lives of Wisconsin’s families, and the Wisconsin economy continues to create significantly fewer jobs than the national average.
Governor Walker has overlooked the failure of tax cuts to boost Wisconsin’s economy, choosing instead to double down on a strategy that has made it harder to make investments in Wisconsin’s schools, workforce, and communities. His budget proposal includes more than $300 million worth of new tax cuts, as well as deep cuts to the University System and public schools to pay for the proposed tax cuts and ones in the past. Read more
Why haven’t the property tax cuts included in Governor Walker’s budget proposal gotten much attention from the media or community advocates? One reason might be because of the way he has structured the tax cuts, which are mingled with state support for public schools. A new budget summary from the Wisconsin Budget Project includes information about the tax cuts and other parts of the Governor’s budget that affect taxes and state revenue.
Unlike income taxes or sales taxes, property taxes are levied by local governments, including counties, cities, school districts, and technical college districts. So when state lawmakers want to cut property taxes, they can’t do it directly. Instead, they increase the amount of aid to local governments while simultaneously prohibiting those governments from increasing their budgets. The result is that local governments must then cut property taxes.
In the state budget, this method of cutting property taxes shows up as an increase in state spending in aid for local governments. Read more
The Very Bad Fiscal News for this Year Offsets Improved Revenue Estimates for the Next Biennium
New budget figures from the Legislative Fiscal Bureau (LFB) indicate that the state is on track to have a $283 million deficit at the end of the fiscal year. That hole is $153 million deeper than what the Department of Administration (DOA) had indicated in November.
Of course, the Fiscal Bureau isn’t predicting that the state will actually finish the fiscal year with a substantial deficit; they are sizing up the amount of red ink that the Walker administration and state legislators have to eliminate in order to meet the constitutional requirement to have a balanced budget.
On many occasions in 2014, we expressed concerns that state lawmakers were going to have to make painful budget cuts before the end of fiscal year 2014-15 because the tax cuts enacted early last year were based on overly optimistic revenue estimates and because the state was planning to draw down almost all of the anticipated balance. Read more
The Department of Revenue (DOR) issued its report on December tax collections today, and at first blush the numbers look bad; however, I think they may actually suggest a modest upturn – relative to the November estimate for the current fiscal year (FY). Whether that assessment is accurate will become apparent later this week when officials release updated state revenue estimates for FY 2014-15 and for the next biennium, which begins on July 1.
What the short new report reveals on its face is that tax collections were down by 2.6% in December, compared to the same month in 2013, and tax collections for the first half of the current fiscal year were down by 2.7% compared to the last six months of 2013. Individual income tax collections for the last half of 2014 were down by 6.4% or $232 million, and corporate income tax revenue was down 8.0% or $38 million. Read more
Wisconsin’s state and local tax system is tilted in favor of those with the highest incomes, according to a new report released today. Wisconsin taxpayers with low and middle incomes typically pay much higher rates of state and local taxes compared to taxpayers with the highest incomes. Some Wisconsin policymakers are advocating for changes that would make our tax system even less equitable, by increasing taxes for most taxpayers to pay for tax cuts for residents with the highest incomes.
Wisconsin taxpayers with the lowest incomes – less than $22,000 a year – pay 8.9% of their income in state and local taxes in 2015, as shown in the chart below, and middle-income taxpayers will pay 10.1% of their income in taxes. In contrast, the top 1% of taxpayers – a group with an average income of $1.1 million – will pay just 6.2% of their income in taxes. The effective state and local tax rate takes into account the deduction from federal taxes. Read more