Wisconsin lawmakers have passed tax cuts totaling $4.8 billion over six years, according to a new legislative memo released this week. These tax cuts have done little to boost job growth and have forced damaging cuts to Wisconsin’s public schools, universities, and health care system.
Lawmakers have passed dozens of tax cuts since January 2011, including millions of dollars in tax cuts that primarily benefit people with high incomes. And lawmakers aren’t slowing down – the total value of tax cuts has increased each year since fiscal year 2012, and is slated to go even higher, to nearly $1.7 billion per year in the two-year budget period that starts in July 2017.
Among the tax cuts passed since January 2011, according to the memo:
- A 2013 income tax rate reduction that gave an average tax cut of $1,440 to taxpayers earning over $300,000 but an average of just $86 for taxpayers who earn under $100,000.
If you look at a new memo from the Legislative Fiscal Bureau (LFB) that itemizes the tax and fee changes in the biennial budget bill, you wouldn’t know that the net effect of the bill is to cut taxes. The fact that the budget bill does cut taxes isn’t obvious in the latest LFB document for a couple of reasons:
- First, the LFB memo summarizes the state-level tax changes and doesn’t examine the reductions in local property taxes that result from increases in state spending for property tax relief and restrictions on local spending.
- Second, the bill uses short-term tax increases to provide a temporary offset to larger long-term tax cuts (and the latter are beyond the two-year time horizon of the LFB analysis).
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
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
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
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.