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. The Homestead Credit cuts taxes for people with incomes of less than about $25,000 – in contrast to the School Levy Credit which provides outsize benefits to wealthy property owners.
But lawmakers have frozen the formula used to calculate the value of the Homestead Credit for homeowners and renters with low incomes. That means as living costs rise, the credit loses value each year, and the amount of property tax paid by seniors and working-class families and individuals increases. In addition, slow increases in income push more and more people above the eligibility ceiling.
Rather than increasing a property tax credit that provides larger benefits to the wealthy and to profitable companies, lawmakers should prioritize tax cuts aimed at Wisconsin residents who struggle to pay high property tax bills relative to their incomes. Read the new analysis for more: A Tale of Two Tax Credits: Lawmakers’ Priorities for Property Tax Cut Favor Wealthy.