Gov. Jim Doyle proposed raising income tax rates on the wealthiest Wisconsinites as a part of his 2009-11 budget, which, if implemented, would move this rate up to the 11th-highest top tax rates in the United States.
This new rate would mean a 1 percent increase in the state income tax for residents whose income exceeds $300,000 a year, according to Carla Vigue, spokesperson for Doyle.
Rep. Spencer Black, D-Madison, said he supports the tax increase because it would mean less severe cutting of state-funded services and activities like the University of Wisconsin System. Black said without this tax increase, the state would have to triple the cut UW is facing.
“The choice we face is to severely cut state services … or to raise additional revenue,” Black said. “It’s an unfortunate situation.”
Black also said because times are tough and working families are suffering, the high tax bracket, comprised of the wealthiest 1 percent of income tax filers in Wisconsin, should pay their fair share in taxes.
“It’s not right if someone who makes $20,000 a year pays the same percent in taxes as someone who makes $1 million a year,” Black said. “The governor’s proposal will remedy this inequity.” Black added this new tax increase could raise around $300 million for the state over the next two years.
Senate Majority Leader Russ Decker, D-Weston, agreed as well, according to spokesperson Carrie Lynch, who said the increases will allow the state’s richest citizens to pay their fair share in taxes.
Joint Finance Committee member Sen. Phil Montgomery, R-Green Bay, said this tax increase, as well as others, would be detrimental for the state since it specifically targets the small business owners of the state.
“When you take money away from people and say, ‘The government knows how to spend this money better,’ it directly translates into destroying jobs because that is less money that a [small business owner] has to put somebody to work,” Montgomery said.
Vigue dismissed this claim, saying this tax increase is on the income of families and individuals, not that of businesses. According to Vigue, the only way small business owners would have to pay this tax is if they give themselves an income in excess of $300,000.
Montgomery also said this tax increase would not do much to alleviate the 2007-09 budget shortfall, which totals approximately $600 million. These taxes, Montgomery said, will only amount to $200 million, covering just one-third of that shortfall.
Montgomery added creating more jobs would be a better option for the state than raising taxes, as more employed citizens will generate more tax revenue in the long run.
According to Black, this revenue will not be used for the $600 million deficit of the current biennium. Doyle’s budget proposal, Black said, is for the 2009-11 biennium, starting in July.
The deficit currently facing the state in the next biennium will amount to around $5.9 billion.