Why Growing Income Inequality is Bad for Wisconsin

Friday, September 14, 2012 at 6:46 PM by

Day 5 of a 5-Part Series on Income Inequality in Wisconsin

The gap between rich and poor in Wisconsin has widened in recent decades. A growing share of total income in Wisconsin is going to the top 1 percent of earners, while middle class and working class Wisconsinites have experienced stagnant or declining incomes.

The growing income inequality is eroding Wisconsin’s middle class. Middle class Wisconsinites are finding it harder to get by economically, as their incomes shrink.

The growing divide isn’t limited to Wisconsin. The share of the nation’s income going to the bottom 60 percent of households was the lowest on record last year, according to newly-released figures from the Census Bureau, and the share going to the top 20 percent was the highest on record. Jared Bernstein of the Center on Budget and Policy Priorities says that for many households, income growth has been “a spectator sport.”

The income figures for Wisconsin that we’ve highlighted this past week only go up to 2010. But since 2010, actions at the state level have widened the gap between the best-off and everyone else. Deep cuts in state support for schools have hit poorer districts the hardest, reductions in health care funding have limited access to health care for working-class families, and cuts in tax credits that help working families pull themselves out of poverty mean that families have a harder time making ends meet. Meanwhile, the Legislature implemented new tax breaks that largely benefited corporations and high earners.

State policymakers are also considering changes to the state’s income tax, which could reduce the tax paid by the highest earners, widening the gap between Wisconsin’s rich and poor.

If we want Wisconsin thrive economically, then we need to make sure that all income groups share in economic gains, rather than the benefits going largely to the top. The way to do that is to focus on creating good-paying jobs, laying the groundwork for a well-educated, healthy workforce in Wisconsin, and investing in our communities – not further reducing taxes for the biggest Wisconsin earners.

Read the full series on income inequality.

Tamarine Cornelius

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