Tax Cuts Break the Bank
Since the beginning of 2011, Wisconsin has implemented six new tax cuts that will cost the state $200 million over the next two years in lost tax revenue.
While the Legislature was adding these new tax breaks – which primarily benefit upper income individuals and businesses – it was slashing investment in our state’s human capital. The result: fewer resources available to promote the education of Wisconsin children, the safety of Wisconsin communities, and the health of Wisconsin’s workforce.
Instead of taking a balanced approach to close the state’s deficit, one that relied on shared sacrifice, the Legislature dug the budget hole deeper with $200 million in new tax breaks. Those tax breaks have opportunity costs, and we need to acknowledge them.
What could the state of Wisconsin get for $200 million? Here are three examples of what Wisconsin could have done with the revenue represented by those tax breaks:
1) If the Legislature had avoided exacerbating the budget deficit by implementing new tax cuts, we could…
Avoid the elimination of 1,000 jobs at Milwaukee Public Schools. Class sizes in MPS are estimated to range from 33 to 35 students, in part due to the loss state aid.
Provide home health care to 2,000 elderly Wisconsinites, allowing them to stay in their homes instead of moving to more costly nursing homes.
2) Or we could…
Keep University of Wisconsin tuition level for the 180,000 students attending the UW system, one of the main economic engines of our state. Instead, the Legislature raised tuition by 5.5 percent in 2012 and another 5.5 percent in 2013. The increase means that most full-time undergraduate students will pay about $1,500 more in tuition over two years.
Restore funding for local recycling programs, which provide jobs and help the environment.
Roll back a $56 million tax increase for 152,000 working families that the Legislature implemented by reducing the Earned Income Tax Credit, which is aimed at helping families pull themselves out of poverty. This cut means a single mom who has three children and is making minimum wage would lose more than $500 per year.
3) Or we could:
Restore additional support to elementary schools that have high proportions of poor children, to help keep class size down and provide remedial assistance. This support was eliminated in the budget.
Cover 58,000 Wisconsin residents who do not have health insurance.
Avoid a hefty cut to a property tax credit aimed at making sure that low-income seniors aren’t forced out of their homes.
In one sense, the Legislature has already made these decisions and trade-offs; the state’s 2011-13 budget has been signed. But in another sense, these decisions are still being made all the time. It wasn’t too long ago that U.S. Representative Paul Ryan (R-WI) proposed his “Roadmap for America,” which combined tax cuts for corporations and the well-off while implementing steep cuts for programs that support the working and middle class.
If we’re to sustain a commitment to investing in our future, we need to know the short and long-term costs of tax cuts, and the trade-offs that are likely to result.