Report: income inequality rising

A new report from the Wisconsin Budget Project and the Center on Wisconsin Strategy showed income inequality is widening  between rich and poor Wisconsinites.

The report showed the “pulling apart” of high- and low-income earners since 1996 using data from the Wisconsin Department of Revenue. 

There is a national trend of increasing income inequality, and while Wisconsin currently ranks as the sixth lowest in income inequality in the country, it is not immune to that trend. The report showed by the late 2000s, Wisconsin’s income inequality was greater than that of the most unequal state in the early 1980s.

The top 20 percent of Wisconsin residents earn 60 percent of the annual income, while the bottom quintile earns three cents for every $100 state residents earn, the report showed.

According to the WDR estimates, between 1996 and 2010, the bottom 40 percent of Wisconsin income earners lost $2,407 in adjusted gross income per tax return, while the top fifth gained $17,286. The increase for the top 1 percent of earners was even larger, with a gain of $168,773 per tax return.

In percentages, the bottom 40 percent saw a decrease of 5 percent in their income between 1996 and 2010, with the top 20 percent seeing a 25 percent increase and the top 1 percent having an increase of 43 percent.

The income inequality report gave four possible solutions to reverse the trend: adjusting and enforcing the minimum wage as well as indexing it to inflation, providing job training for low-income workers, protecting working-class family support services and making state and local taxes more progressive.

Rep. Brett Hulsey, D-Madison compared the inequality today to that of the Roaring Twenties. Hulsey said legislators should address the issue by making changes in the tax code and increasing the minimum wage.

“We need to increase taxes on the super rich and close corporate tax loopholes,” Hulsey said. “We had higher taxes on individuals during Eisenhower’s presidency when income inequality was at its lowest.”

Republicans like Gov. Scott Walker and conservative groups like Wisconsin Manufacturers and Commerce think one of the solutions is Wisconsin getting the private sector growing and getting more jobs in the state.

In a statement earlier this month, WMC President and CEO Kurt Bauer praised Walker’s business-friendly agenda and said similar reforms should continue in the next legislative session, which starts in January.

Bauer noted Wisconsin has become among the top states in the nation in having a good business climate and can continue to move up those rankings with more business-friendly policies.

“Governor Walker and the Legislature deserve tremendous credit for improving our business climate,” he said. “In 2011, Walker and the Legislature passed tax cuts, lawsuit reform and regulatory reform and balanced the budget without tax hikes. We have made unprecedented progress, and we need to keep pushing to be more competitive.”

Bauer said the national and international attention Walker brought to Wisconsin with his reforms, including those on public sector unions, has “allowed the state to shine” around the world and has given the state a “rare opportunity” to bring jobs into the state.