You might be penalized with a large late fee and interest payments on the unpaid taxes if you miss the Tax Day deadline, but the United States doles out much harsher penalties due to their archaic tax codes. Wisconsin’s tax code in particular penalizes work and therefore our ability to rebound from recessions. It’s also undermining essential public services by increasing income inequality.

A new report from the Center on Wisconsin Strategy and the Wisconsin Council on Children and Families released last week shows that income inequality has increased drastically in Wisconsin since the late 1980s. The real wages of the bottom 20 percent of the income distribution grew only 7 percent while the top 20 percent saw their wages grow 36 percent.

The income of the top 5 percent of the population grew a shocking 60 percent.

At the same time, as inequality is becoming a larger and larger problem, Wisconsin’s tax code has remained quite regressive, meaning the share of income you pay in taxes goes down as your income goes up. According to the Center on Wisconsin Strategy’s report, in 2002 the richest 1 percent of taxpayers in Wisconsin paid only 8.1 percent of their income in state and local taxes while the poorest 20 percent paid 10.2 percent and the middle quintile paid 11.3 percent. How can we expect any degree of income equality when we make the low and middle income bear a larger burden of funding state services than the rich?

It’s possible the tax code is not responsible for this. After all, globalization is largely responsible for depressing wages for those without a college education and eliminating countless manufacturing jobs, right? But these factors are affecting all states equally, whereas Wisconsin’s equality has been declining at a faster rate. Wisconsin consistently had one of the smallest gaps between rich and poor, but we’ve moved down in the rankings from the fifth to the 11th smallest income gap in two decades.

Some may ask why we should shift our tax code when the rich pay, by far, the largest amount of taxes. While it’s true the low income do pay little or no federal taxes, they are disproportionately affected by payroll, property, excise and sales taxes. The last one is critical because so much of low-income paychecks go to immediate consumption while paychecks for the well-to-do are more likely to be saved and invested.

When analysts, journalists, and policymakers point out the worrying trends in income distribution, they are often accused of “class warfare” or wanting socialistic-enforced equality through redistribution. I’m not advocating that; there will always be class differences in a capitalist society. But extreme income inequality has all sorts of drawbacks beyond the simple fact that some people are bound to be poorer than others.

When incomes become vastly unequal, different classes begin to have completely different concerns and priorities. While the working class is struggling day-to-day to get by and is often unable to afford quality health care and higher education, the very wealthy can devote themselves to eliminating the estate tax so they can pass on their millions to their offspring tax-free. I guess you can never have too many yachts.

This increasing class polarization has tangible negative effects on the have-nots. Public schools, crime and environmental problems increasingly fall off the national radar as the wealthy segregate themselves into walled suburban communities — with artificial lakes and bottled water — and send their children to private schools.

There are solutions available to help even the playing field. Raising the minimum wage is important, but it can only get so high before it starts burdening small businesses. That’s why raising the Earned Income Tax Credit is so essential for offsetting the regressive nature of state taxes and rewarding those who have dependents but are continuing to work. The Homestead Tax Credit, which offsets the property tax burden for the low-income earners, hasn’t been raised since 1991. Raising that credit has the potential to help a lot of low-income student renters here in Madison, because property taxes constitute a chunk of the rent you pay your landlord. Finally, we must not eliminate the estate tax — which only affects the very wealthiest — particularly in a time of massive budget deficits.

As the state and the country enter a recession, some will claim we should focus on economic stimulus above all other priorities. But what’s the use of having lots of economic growth if most people aren’t sharing in it? It’s something to think about while you’re frantically running to file taxes on time.

Ryan Greenfield ([email protected]) is a junior majoring in political science and economics.