New Proposals Seek to Increase Taxes, Limit Deductions for Well-Off
Can we help fund the creation of jobs by increasing the amount of taxes paid by the well-off? Senator Harry Reid thinks so. He has proposed a “millionaire’s tax,” which would impose a 5.6 percent surtax on those who earn over $1 million a year. In Wisconsin, 0.1 percent of taxpayers would be subject to the surtax, according to an analysis by Citizens for Tax Justice.
The additional revenues raised by the surtax would pay for President Obama’s proposed American Jobs Act, a package that includes $447 billion in tax cuts and new spending aimed at increasing employment and upgrading infrastructure across the country. On Tuesday, the American Jobs Act failed to pass the Democrat-controlled Senate, and Sen. Reid has said he will break up the Act and try to pass individual pieces.
At the state level, Rep. Cory Mason (D-Racine) has proposed similar legislation which would increase taxes on people earning more than $1,000,000. The revenue raised would be used to restore the $70 million cut to technical colleges included in the 2011-13 biennial budget. Technical colleges are an important driver of Wisconsin’s economic growth.
Another proposal is circulating to change the Wisconsin law that allows a corporation to deduct up to $1 million from its income tax for the compensation paid to each of its executive officers. Instead a corporation’s deduction would be limited to 25 times the amount its lowest paid full-time employee earns. So for example, if the lowest paid employee earned $15,000 per year, the deduction for corporate pay would be limited to $375,000 rather than $1 million.
These proposals represent a useful place from which to begin the conversation about the need to invest in job creation and the need for shared sacrifice across all income levels, even among top earners.