Press Statement on the Kooyenga Tax Cut Plan
As we begin to analyze the income tax plan unveiled by Rep. Kooyenga today, we have several initial concerns. The new plan is tilted toward high-income Wisconsinites, even more so than the Governor’s plan; it is likely to create a very large hole in the next biennial budget; and it undermines the state’s ability to invest in things like K-12 education that are critical for Wisconsin’s future economic competitiveness.
Under the governor’s plan, the top 14 percent of tax filers would receive almost half of the proposed tax cut. This plan is tilted even more heavily in favor of the wealthy because most of the additional cut will go to people who are now in the top two brackets – particularly to couples making more than $217,000 per year.
More than three-quarters of a million Wisconsinites who currently file tax returns won’t see any benefit. That’s a significant omission because those low-income individuals and families already pay a higher percentage of their income in taxes than the wealthiest 5 percent of Wisconsinites.
According to the Legislative Fiscal Bureau, the cost of the plan grows by about $360 million in the next biennium – about $168 million in 2015-16 and $193 million in 2016-17, relative to the 2014-15 cost. Because of the growth in the next biennium and the fact that the plan is financed in this biennium partly with one-time revenue, the proposal is likely to significantly increase the structural deficit – creating an even larger hole in the next biennium than the $664 million gap that the Fiscal Bureau previously estimated the Governor’s budget would create in 2015-17.
Proponents of the tax cut say that it will boost the Wisconsin economy, but recent history in other states shows the opposite is more likely to be true. States that cut personal income taxes in the 1990s and 2000s lagged the rest of the country in economic growth. Cutting taxes is no substitute for public investments in high-quality schools, roads, and communities that attract business.
Jon Peacock, Project Director (608-284-0580 x 307)