While Gov. Scott Walker has touted his income tax cuts as helping the middle class, upper-income filers in Wisconsin will enjoy far bigger savings.

The budget proposal released Wednesday calls for reducing the rates in the lower four of six tax brackets. The top two brackets for married couples filing jointly with incomes over $211,900 would remain unchanged.

But because of how the state’s tax system is structured, all taxpayers would benefit from the lower rates. And that skews the numbers toward the wealthy, according to figures compiled by the Wisconsin Budget Project.

For example, a family of four with taxable income of $25,000 would see their state income tax bill go down by $6. At $50,000, the savings is $54; at $100,000 it’s $138; and at $200,000 the savings is $270.

"At first blush, the proposed tax cuts sound like they will help moderate-income families but the primary effect is to help the wealthy,” says Jon Peacock of the Wisconsin Budget Project.

Peacock notes that more than half of the projected $172 million in income tax cuts annually would go to the upper 20 percent of state residents.

“This just exacerbates the problem that the rich pay a much lower percent of their income for state and local taxes than lower-income Wisconsin families,” he says, noting a recent national report on that issue.

But trying to target tax relief to just middle-income earners is difficult. Because Wisconsin has a progressive income tax structure like the federal government's, lower rates impact everyone and obviously provide more savings to those who pay more to begin with.

“Cutting rates in the lower brackets is really as close as you can get unless you offered specific credits,” says Dale Knapp, research director for the Wisconsin Taxpayers Alliance.

Actually, Walker’s 2011-2013 budget did use tax credits to target a specific group: factory owners and their investors. A domestic production tax credit that kicks in this year will deliver an estimated $360 million in tax savings to manufacturers over the next four years and some $130 million each year thereafter, according to the non-partisan Legislative Fiscal Bureau.

This time, the governor has made a broad income tax cut a centerpiece of his 2013-2015 budget. Combined with continued limits on property taxes, Walker says the cuts will spark the economy and lead to more jobs.

“Our middle-class tax cut is a downpayment on my goal of reducing the tax burden in our state every year I'm in office,” said Walker in his budget speech Wednesday. “I want to cut taxes over and over and over again until we are leading the country in economic recovery."

But the combined property and income tax cuts — estimated at about $315 million annually — are likely too small to make that much difference in the state’s $220 billion economy, says Knapp.

“In terms of the overall size of the economy, the tax cut is really not that big,” he says.

The bigger concern, Knapp says, is that the state might fall back into a budget hole.

“Looking at the big picture after a lot of hard work and pain to get the budget balanced, now we’re moving back in the other direction,” he says. “In some sense that is a little disappointing but it does show the governor’s priorities.”

And some Republicans are hinting at even larger tax cuts when the Legislature starts to look at the budget in detail. The state is running a budget surplus of some $484 million, according to the latest estimates.

"I want the largest, most robust tax cut we can possibly afford, because it's not about accounting of future years," says Assembly Speaker Robin Vos, R-Rochester. "It should be about the accounting today, which shows our budget is balanced and more money in the hands of every single taxpayer is good for our economy."

But advocacy groups say the budget proposal does little to create jobs and won’t improve the lives of low-income and middle-class residents.

United Wisconsin notes that Walker's budget talk did not mention his pledge to create 250,000 new jobs during his first four-year term. The state has seen fewer than 50,000 new jobs since January 2011, according to the Bureau of Labor Statistics.

”After two years of failing to meet his campaign promises, Walker’s budget proposal offers nothing new to promote job creation — just more of the same tax giveaways to big businesses and the wealthy in the guise of economic development,” says Lisa Subeck of United Wisconsin.

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(36) comments

Observer5

The tax cuts don't amount to much, even to the wealthy, but they do enhance Scooter's rock star status on the national stage and embellish his presidential ambitions.

rip

This really means farmers.

PapaLorax

oh and - I must have missed the CT article where they blasted Obama for continuing the portion of the bush tax cuts that he did...because that skews in rich in the exact same way that Walker's budget. Cutting taxes for couples below roughly $250k.

hmmmm

PapaLorax

So the people who pay the taxes get the cuts? are people really surprised?

"a family of four with taxable income of $25,000 would see their state income tax bill go down by $6. "

It would fall from what to what? Without an ounce of research I am guessing that these people tend to pay next to nothing in income taxes to begin with.

All I can say is - way to go GOP...it's a baby step in the right direction.

Tippecanoeien

Papa: Please stop drinking the Kool-Aid and put those funny cigarettes away; they are making you delusional!

PapaLorax

What Kool-aid? Do you think people who make $25k pay state income taxes?

ajollyskullnbones

Well... they probably drink Kool-aid.

toobad

Can't you make a coherent comment, tippe?

1111

Rich republicans always trick gullible poor republicans and independents to vote for the wealthy

toobad

Sounds more like 0bama supporters, if you looked at economic statistics the last 4 years.

Retired PE

And, this is news how? Walker wouldn't be much of a GOP/Tea Party golden boy now would he if his tax proposals didn't benefit the wealthy over the middleclass?! If anyone in this state can be duped that easily that Walker cares about the middleclass in this state, then I've got a state power plant I could sell you! Or better yet, a huge piece of land that you can dig up, mine the ore, pollute the environment, and then walk away for others to clean-up the mess. Spend your $6 to $270 "windfall" well!

tomtom33
tomtom33

Demonization was invented for people who cannot express logical arguments.

LeftCoastConservative

I can't believe I just read this article. Seriously people.. The fact this viewpoint could possibly be written explains a lot about the future of our country and the degradation of our core beliefs as a free land.

Fartinthewind
Fartinthewind

Walker says, “Our middle-class tax cut is a downpayment on my goal of reducing the tax burden in our state every year I'm in office. “I want to cut taxes over and over and over again until we are leading the country in economic recovery."

To reach his goal Walker gives peanuts to everyone except manufactures and "producers." Then he tops off a pathetic tax cut by announcing he's adding 600 million to the state's deficit. In fairness, I don't know that a budget I'd be predisposed to accept wouldn't add more to the deficit. But why on earth offer a pathetic tax cut and a deficit? That's definitely more about public relations than practicality.

Fact or Fiction
Fact or Fiction

@ Fartinthewind: Walker's goal of never-ending tax cuts will not make the Wisconsin the "leading state" in economic recovery any more then those same tax cuts have produced Walker's 250,000 promised new jobs. If Walker cannot produce evidence that economists agree that tax cuts produce economic recovery, and especially severe, nearly endless tax cuts, then Walker should find an honest way to lead, not more promises, lies, and disapointments.

witness2012

This move is a mistake. No one will get enough money to really increase their disposable income and increasing our structural deficit is just irresponsible. It makes no fiscal sense at all.

davea

Unless your rich, of course!

LEEM

When will office holders ever care about their constituents again. I have had my fill of these no-nothing, do-nothing, sneaky Republicans. Shame on you Scott.

toobad

Well, move out of your parents basement then.

warmmidwest

What's the rate if you're not in a family of four?

Bones55

It's also worth noting that, based on the author's logic, our tax system heavily favors the poor since they pay less total money in. That probably should have been thought about before this piece got submitted.

bookman21
bookman21

Yeah, you're right. Blame it on the poor.

Liberalsmakesense

That's all the Republicans know how to do. They have such disdain for the poor people

Bones55

Here's to throwing around cliches and totally missing the point! This isn't an attack on poor people, it's an attack on a poor argument.

The article says that tax breaks are skewed towards people with more money because x% of a large amount is more than x% of a small amount so people with more get more back. While that is true, when you flip the language of the argument around and talk about the money everyone is paying in, that same point now says if you have more money and are taxed at x%, you will be paying more total money into the pot than someone with less money being taxed at that same rate. At that point, your argument that Scott Walker is favoring any specific group with this particular tax cut no longer holds any water.

Retired PE

Liberalsmakesense, that's the Ayn Rand mindset of WI GOP/Tea Partiers (including golden boy Paul Ryan), "let the poor people survive on their own without any type of government help; it's called 'social darwinism.'" Sad when these people call themselves so "Christian." "The meek may inherit the earth" all right after the Tea Party/Ayn Rand devotees have destroyed it.

Liberalsmakesense

We need to dethrone Walker and get rid of the Republican legislature that has wreaked havoc on our state.

Bones55

This headline reads like the author uncovered some kind of conspiracy but when you actually read the piece, all it says is that the author has a basic understanding of percentages. 1% of a large number ends up being a larger amount than 1% of a small number...how enlightening. I understand and appreciate that many people dislike Governor Walker but if you're going to be critical of him, at least write something worth reading.

Nav

Bones, although I know what you are trying to say, the basic premise of the article is correct. The tax cuts ARE skewed towards the wealthy no matter how you look at it. Do you disagree with that?

Bones55

It's not a skew, it's basic mathematics. What if we changed the language and, instead of calling this a tax break and talking about the money we get back, we called it a rate decrease and talked about the money we paid in? With a simple change in language, the same premise that this article is built around would suggest that the entire tax structure favors poor people because the same basic mathematics that say rich people get more money back from a tax break says that poor people pay less in taxes in the first place. That is why the whole argument fails. It uses half of an equation and relies on the reader not stepping back and thinking about.

To bring this into practical terms, think about it like this: You get a 30% coupon at Kohls. If you only buy a $10 item, you save $3. If you buy a $100 item, you save $30. Does this discount favor buying large items? Not really. If you saved $30 it means you just lost $70. If you saved $3 it means you only spent $7. The coupon wasn't skewed. It was just part of a simple math equation.

In closing, I am not, in any way, attacking the poor or suggesting that this tax cut will do anything to help anyone. I am simply pointing out that the basic premise on which the argument was built is fundamentally flawed.

Bones is Absolutely right. Where is the cooresponding article that says - "People who make more pay more in income tax" This just in. If you've paid more tax, then when they give some of it back, you get an equally larger portion back. Example - Kohl's gives us both a 20% off coupon. If you but a pair of socks for $5 you will get $1 off ( 20%). If I buy 4 pairs of pants, shoes, towels, shirts, etc for $300 I will get $60 back ( also 20%) Then the state Journal can run a huge story about how Kohl's Gave me $60 while they only gave you $1 meanwhile I PAID $240 while you paid $4. Get the picture now?

mjj
mjj

Bones, the point of the article is to reveal that the tax-cut is a ruse. He's talking about helping out the middle class, and in reality he's throwing the average middle-class family a bone of about $40. Does that soften the blow of deflated education programs? My family lives on a pretty lean budget right now and I can tell you I'd happily pay higher taxes if education quality was a concern of the state. Walker's blowing smoke, but the truth is the majority of families (lower-to-mid) are getting next to nothing. Should we thank him? I won't be.

Beingbucky
Beingbucky

Walker will keep cutting taxes until the state is an anarchistic haven for ginseng hunters and Walmart workers. Squirrel--it's what's for dinner!

RichardSRussell
RichardSRussell

What about corporate income taxes? They used to account for something like 25% of income-tax revenue in Wisconsin. Last I heard, they were down below 10% and still falling.

tomtom33
tomtom33

Where do you think business gets the money to pay taxes?

toobad

If you had an economics IQ above zero, you would know that corporations DO NOT pay taxes, their employees (lower wages) and customers (higher prices) pay them.

Its because we only make them pay on the profit. In our incredible wisdom we punish those who do well. since most businesses are struggling and do not make profit they don't pay taxes. The companies who are doing well and do pay taxes are ALL looking for ways around this. That is why they are all moving off-shore and to other countries. We must change our corp tax code and go to a value added tax. Then all corps would pay a small amount, but it would add up to so much more. Then they wouldn't all be trying to cook the books to show a loss. They would all be taxed fairly and evenly and would work to make a profit.

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