Tax Cut Passes the Assembly, but Tax Increase Stays in Place
On the same day that the state Assembly passed a substantial property and income tax cut package, it declined to reverse a recent tax hike for parents who work at low-wage jobs.
The $537 million tax cut package, which diverts money that would otherwise go to the state’s rainy day fund, has already been approved by the Senate and now goes to the governor for his signature. (For more about the tax cut, read our March 4th blog post, Five Things to Know about Wisconsin’s Proposed Tax Cut Package.) “That’s exactly what taxpayers want — giving their money back to them rather than keep their dollars here in Madison,” Assembly Speaker Robin Vos said in this Milwaukee Journal Sentinel article.
Despite the Assembly’s enthusiasm for cutting taxes, it missed a chance yesterday to roll back a recent tax increase for families with low incomes. The Assembly failed to advance a bill that would repeal changes made the Earned Income Tax Credit in 2011 that resulted in working parents with low incomes paying higher taxes. The bill to improve the EITC would have cost $54.5 million over two years, or about 1/10 of the amount of the larger, untargeted tax cut package.
That 2011 tax increase on low-income families is particularly harmful because Wisconsin taxpayers with the lowest incomes pay a higher share of their income in state and local taxes than taxpayers with the highest incomes. As a result of the 2011 tax increase, a single mother who has three children and works full time at minimum wage has paid about $1,500 more in taxes over the last three years than she otherwise would have.
The budget surplus has presented Wisconsin with a number of opportunities to invest our state’s workforce needs, close budget holes, set aside money for an economic downturn, as well as roll back tax increases on working families. Instead, lawmakers have chosen to pass an unaffordable tax cut that gives a great deal of the benefit to the top earners, and digs a deep hole in the next budget.