Two separate analyses of Gov. Scott Walker’s proposed budget found the richest citizens in the state stand to benefit the most from his income tax cuts, which have been billed as relief for middle class taxpayers.
A collaborative report from the Council on Children and Families and the Institute of Taxation and Economic Policy found the top 20 percent of Wisconsin households earning more than $90,000 annually benefit from more than half of all Walker’s tax cut.
Another report from the Legislative Fiscal Bureau confirmed those making six figures or more make up less than one-fifth of those receiving a tax cut, yet they would save on more than 49 percent on the $170 million proposed yearly tax cut. The bureau’s analysis added average state taxpayers would save $83 in 2014.
Wisconsin CCF Research Director Jon Peacock said the amount of money Wisconsinites save from Walker’s tax cut increases proportionally to the annual income of these people, up to about $200,000. He noted the findings were not surprising, as cutting taxes primarily helps the wealthy because they receive the full benefit of those cuts.
According to Peacock, the governor’s proposed tax cuts are “misleading” because he touted these benefits to middle class Wisconsin residents.
“We’re not saying [Walker’s administration] went out of [its] way to design a way to benefit the rich,” Peacock said “It could have been much worse and much more skewed to help the rich, but their description of it as helping middle income people is a bit deceptive because they really aren’t going to see too much [of a benefit].”
Peacock added someone making $50,000 a year may only see tax relief amounting to $50 or less annually. He noted those below the poverty line of about $21,000 will save $2 or less annually.
Walker’s total income tax cut for the 2013-2015 biennial budget is $343 million, or 2.2 percent, according to the CCF and ITEP findings.
“We question whether the state should be cutting taxes now instead of providing increased funding for schools,” Peacock said. “We question whether this is the best way to use the surplus funds the state has right now.”
According to the statement from Bob Lang, director of the non-partisan fiscal bureau, individuals earning six figures or more comprise four percent of those who would receive a tax cut. However, these taxpayers would be given 16 percent of the $49.3 million total tax decrease. These same taxpayers earning more than $100,000 a year make 18 percent of Wisconsin’s income currently pay about 26.7% income taxes under current law, the statement said.
Assembly Minority Leader Peter Barca, D-Kenosha, said in a statement academics, economists, think tanks and even conservative groups have criticized Walker’s economic policies. He added he does not believe these proposed tax cuts produce more jobs or help the state’s economy.
“A true middle-class budget would balance real middle-class income tax relief with investments in important areas such as public education and access to affordable health care,” Barca said. “Unfortunately the governor has again chosen to ignore Wisconsin’s long-term health in order to score short-term political points.”