Robin Hood in Reverse
Republicans’ tax plan assures that Wisconsin follows other states in the race to the bottom.
Rep. Robin Vos, state Assembly Speaker.
Republican Assembly Speaker Robin Vos lives in the tiny village of Rochester, WI, population 3,682, whose website boasts of a “unique small town charm that mixes urban, farming and country life styles.” It’s located just 23 miles from downtown Racine, but might as well be on the other side of the earth when it comes to the tax policies Vos wants to pursue.
Vos proposes to reduce taxes on what he calls the “middle class,” but his definition leaves out nearly two-fifths of tax filers in the state — the 39 percent of households that earn less than $20,000 annually. Few of those folks live in Rochester, I suspect, but they make up many of the people in Racine and Milwaukee and Green Bay and all the major cities of Wisconsin, and they won’t get a dollar of tax relief.
At first glance, Vos seemed ready to assess the cold, hard facts before deciding the proper policy for Wisconsin. He created a bipartisan “Legislative Steering Committee on Taxation” which crunched a lot of numbers, leaving Vos to conclude that “Wisconsin is a really good place to be poor,” but “not a good place to be middle income.”
There is some truth to that observation if you consider only the state income tax, which is the only tax Vos wants to adjust, and which falls lightest on the poor. But Wisconsin has two other major taxes, the sales tax and property tax, and both fall harder on the poor.
Figures from the national Institute for Tax and Economic Policy analyzed the total tax burden by state and found the bottom 20 percent of Wisconsinites pay 9.4 percent of their income in taxes. By contrast, the top one percent of Wisconsinites pay just 6.7 percent of their incomes in taxes, the top four percent below that pay 7.9 percent and the 15 percent of taxpayers below that pay 9.2 percent. Meanwhile, the broad range of Wisconsinites in between these extremes pay anywhere from 10.3 to 10.6 percent in taxes.
In short, Wisconsin’s tax system is Robin Hood in reverse: it rewards the rich at the expense of the middle class and poor. Yes, Wisconsin’s system is less regressive than most states, but the difference is not huge. In essence, you have a situation where state taxes are increasing the wealth inequity in America, and Vos wants to make sure Wisconsin’s poor people don’t fall behind other states in this race to the bottom.
Consider what the Republicans and Gov. Scott Walker did to taxes in their first legislative term. They passed $36 million in capital gain taxes and 46 percent of those breaks will go to the top 2 percent of earners in Wisconsin, according to the Legislative Fiscal Bureau. They also passed $49 million in tax breaks for those with Health Savings Accounts, again benefiting the well-to-do: the average income of someone with such an account is more than $100,000, according to the Government Accountability Office.
As for poor people, Walker and Republicans slashed the earned income tax credit. This provision was created under Republican Gov. Tommy Thompson and won bipartisan support as a way to reward work and help those whose wages were inadequate to support a family.
A recent study by the UW-Milwaukee Employment and Training Institute looked at the earned income tax credit cuts and found they had “a dramatic and devastating impact on some of the lowest wage, single working parents,” as ETI director John Pawasarat noted. The average single parent family saw its tax credit drop by 23 percent, the study found.
Vos‘s new proposal does nothing to restore this money to poor families. It will make some reduction in income taxes for the middle class, but its definition of the “middle” reaches well in to the upper class, cutting income taxes for those earning between $20,000 and $200,000. This includes the many taxpayers who earn $150,000 to $200,000, which is three to four times the average taxpayer in Wisconsin, and who already pay less of their income in taxes than the poor and middle class.
Indeed, the idea of redefining the once-broad middle class in Wisconsin as including only the 58 percent of tax filers who earn $20,000 to $200,000 essentially accepts the idea that America’s growing wealth inequity is shrinking the middle class. So not why not shrink them more, Vos seems to be saying.
When Vos was 14, he worked as a grocery story bagger in small town Burlington, where he surely served many of the working poor families he now wants to exclude from his tax plan. The Republicans 2010 legislative redistricting packed the cities and poor people into heavily Democratic districts that can now be ignored by the legislative majority, even though Democrats actually garnered the majority of votes for legislators in 2012. In the new Wisconsin, just 58 percent of the people deserve a tax cut.
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Wow. I thought I was pretty average in terms of pay. Now, Murphy tells me I am apart of the “rich”. Thanks for making my weekend.
Thanks, Bruce. Great article.
Despite Robin Vos redistricting himself into an area that included mostly Tea Party radicals (and his close family & friends), he STILL lost another 7% of the voters in 2012, compared to the election in 2010. If he continues down this path, he will lost that critical 8% that would give the election to a Democrat challenger. I hope and pray the Kelley Albrecht will take on Vos again in 2014. I think she’ll be able to kick Vos out of a job in the Assembly…PARTICULARLY given Vos’s continued war on women. Let us know if Albrecht will be running for office again!!
Looks like another incentive to not be poor. Chop! Chop!
Since Vos, Darling and Walker had no trouble snubbing their nose at the crowds that took over the Captal square after they “dropped the bomb”, it’s hard to see how this trend is going to be stopped. Larson, Baraca and company are in no postion to do more than try to minimize the damage.
I agree with Joanne. We need quality candidates to oppose these people. Candidates who are not only qualified but representative of the middle class the party purports to represent. They can, and in my mind should be, progressive in their philosophy, but articulate enough to explain and support progressive views. To many progressive/liberal politicians seem to be ashamed to defend and promote their beliefs. They are not good in persuading and promoting why their views and proposals benefit not only true believers but the vast majority of Wisconsin citizens. We have to remember we can turn this around but just motivating the base. We have to bring in the moderates and independents who have to this point been charmed by the promises of less taxes and angered by the so-calle excesses of big government.
Bruce, you confound me…
Vos wants to lower income taxes for almost everyone, including people making as low as $20,000, and this is a bad thing? The poor won’t save money in income taxes because they don’t *pay* income taxes. At the point you argue that we should look at lowering sales taxes, my mind wanders back to the article you wrote about state aid, in which you seem to be a proponent of Milwaukee generating additional taxes in fees and other local taxes. These would hit hardest the very people that you’re trying to argue for in this article. I may be mistaken, but I believe I’ve read you argue that we should increase gas taxes… which again, would hit the people you are most concerned about the most.
Considering the poor pay some of the lowest total percentage of their income in taxes is amazing! Since they make so little, you’d assume it would be much higher. (Just like it makes sense that the top 1-5% spend the least proportion considering a fee or property tax would be a smaller portion of their overall income)
I suppose that yes, the fact that they are only slightly below the middle class in percent of income used for taxes does surprise me. Considering they have little to no income tax, usually no property tax, few fees, and on top of that families can get the earned income tax credit (Now without many of the work requirements thanks to the Federal government this past year), it’s crazy that the net taxes aren’t in the positive.
I applaud Vos for pushing a wide ranging tax break for everyone from low income all the way to the upper middle class. This would be welcome relief AND a great stimulus for the local economy.
Andy,
I think you make Bruce’s point. Switching from the income tax to sales tax and cutting things like the earned income credit, makes the overall Wisconsin tax structure more regressive.
Andy,
I did not propose that Milwaukee increase taxes but argued that its state aid (which has traditionally come from the state income tax) had declined drastically over the last decade under governors of both parties. As for those earning less than $20,000, they pay more in taxes than the wealthy and so a restoration of the prior level of earned income tax credit would lower their total tax payments.
@Andy And just to clarify I have, and will continue to, argue that the gas tax must go up (not Bruce to my knowledge). And that is both Wisconsin’s and especially the federal gas tax. It simply has not kept up with inflation.
Thanks for the replies, I love the discussion.
@Dave, I knew you were a huge proponent, but unless I’m mistaken I’ve heard/read that Bruce also supported a change in the gas tax.
@Bruce1&Bruce2, all I’m saying is that logic would state that the less money you make, the larger impact non-income taxes would have. Restoring the 100-200 dollars (unless they have 1 child, in which the EITC would go down if we restored the plan to previous levels) in EITC doesn’t seem to me like it would make a huge impact… when I made $20,000 right out of college working for a non-profit that amoung wouldn’t have changed my world… but nor did I have children to take care of.
In the end, isn’t this the reason we have housing assistance, WIC, SNAP, and a myriad of other assistance programs in addition to private and non-profit groups as well? If a person makes $15,000 a year and pays 9.2% of their income in taxes, the net benefit of those programs would surely reverse that burden to a positive number.
So my point really circles back to this… reducing income taxes for everyone (except the “rich”) reduces a burden for many families, will help stimulate our local economies, has little to no negative impact on those earning less then $20,000 a year, and in the end will hopefully spur new job creation that will help people at all income levels. This plan just seems like a win for all sides as long as it doesn’t come at the expense of any new cuts in critical state programs. Why fight that?