Income Inequality in Wisconsin

Monday, September 10, 2012 at 2:51 PM by

Day 1 of a 5-Day Series on Income Inequality in Wisconsin

It’s getting harder for middle-class and lower-income families in Wisconsin to make ends meet, in part due to the recent trend of policy changes that benefit well-off Wisconsinites at the expense of working class families. Substantial cuts to tax credits for working families, changes that reduce access to health insurance, and diminished educational opportunities have hit middle and lower-income families hard. Meanwhile, the Legislature has cut taxes for high earners and corporations.

These changes come on top of growing income inequality in Wisconsin. In recent years, the income of the top one percent of earners has soared, while the incomes of middle class and working class families have stagnated or decreased. By making budget cuts that undercut support for middle-class and lower-income Wisconsinites, the Legislature has made it more likely that the trend of growing income inequality will continue.

In Wisconsin, most of the income flows to the biggest earners. As the chart below shows, 60 percent of the income in Wisconsin goes to the top 20 percent of earners. The average adjusted gross income reported on tax returns in this group was $149,000. In contrast, the bottom fifth earned only 0.03 percent of income in Wisconsin – three cents of every $100 earned in Wisconsin.

The concentration of income at the top becomes even more apparent when you look at the amount earned by the top one percent of earners in Wisconsin. The top one percent of earners earned 15.4 percent of the income in 2010, and the bottom 40 percent earned only 5.5 percent of the income, as shown in the chart below.

The average income reported on Wisconsin tax returns in the top one percent was $764,000 in 2010 – more than a hundred times the average income of filers in the bottom 40 percent, who on average earned $6,800.

Tamarine Cornelius

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