Tamarine Cornelius
Wisconsin Budget

Wealthy Get Best Deal From State Taxes

The one percent pays 6.2% of income in taxes, middle class pays 10%.

By , Wisconsin Budget Project - Apr 15th, 2016 02:19 pm
In Wisconsin's Tax System, Best-Off Pay Smallest Share of Their Income in Taxes

In Wisconsin’s Tax System, Best-Off Pay Smallest Share of Their Income in Taxes

Wisconsin is a better place when we all do well. Unfortunately, while the wealthiest have seen their incomes skyrocket in recent decades, incomes have stagnated for the middle class and those who struggle hardest to make ends meet. It’s becoming harder to make it to the middle class and stay there.

Wisconsin’s state and local tax system, like the tax systems in most states, makes this problem worse. If you look at who pays taxes in Wisconsin, it turns out that middle-class and low-income families pay a bigger share of their incomes in state and local taxes than the wealthiest households in the state. We call on financially-stressed families to pay 8.9 cents out of every dollar they earn in state and local taxes, while the wealthiest households pay just 6.2 cents out of every dollar of income. And many corporations pay little or nothing in income taxes.

Wisconsin’s middle class, once one of the strongest in the country, is shrinking faster than in any other state. That trend should set off alarm bells for policymakers, who should be using the tax system and other tools to help people work their way up the economic ladder. Instead, lawmakers have cut back on two tax credits that help struggling families climb into the middle class.

State spending on both the Homestead Credit, which caps property taxes for people with low incomes,  and the Earned Income Tax Credit, which boosts tax refunds for working families with children, is projected to drop by more than 20% between 2011 and 2016. That’s because lawmakers made changes to those credits that reduced credit amounts and increased the amount of taxes paid by Wisconsin residents with low incomes – at the same time that lawmakers were passing tax cuts slanted towards the highest earners.

In Wisconsin, the top 1% is thriving, with their share of income reaching its highest level ever. We need to make sure our tax system doesn’t give the top 1% an additional advantage at the expense of taxpayers of more modest means.  Instead of looking for new ways to cut taxes for people with the highest incomes, state lawmakers should turn their attention to measures that put a little more money in the pockets of families trying to make ends meet. Reversing recent cuts in the state’s tax credits for low-income households would be a good start.

9 thoughts on “Wisconsin Budget: Wealthy Get Best Deal From State Taxes”

  1. M says:

    There are no signs that Republicans beholden to wealthy benefactors will do anything to legislate tax policy to make it easier for middle and lower income people to survive here. The wealthy have lobbied and donated and gotten their demands met. Legislators have collected those donations and made their pledges. How can they back down now?

    As the middle class gets squeezed more and more, the legislature will just keep extolling the virtues of trickle-down voodoo economics and slash services that serve the public like schools, parks and transit. But they will make sure they keep investing in more highways. The road lobby is another beast that must be fed.

  2. A says:

    But, but, giving the wealthy huge tax breaks creates jobs, doesn’t it? How’s that been working out for you Scotty? Not so well? Will you change your polices then? No. Because then you would get less in donations for your future campaigns to continue to live off the public dole wouldn’t you.

  3. WashCoRepub says:

    The ONLY fair tax is a Flat Tax, at both the Federal and State levels. Everyone is taxed at the exact same rate on income and capital gains. You can make the argument in favor of a highly progressive tax scale, but just don’t call it ‘fair’ taxation when it is, in fact, the exact opposite.

  4. JK says:

    This is very disappointing. I would expect more from Urban Milwaukee. It is stories like this which only demonize people who do well financially and perpetuate the myth that the financially successful are somehow getting away with avoiding taxes. Check the facts. Wealthy people pay close to 50% of their income in state and federal taxes which excludes property and sales taxes. In order to address the issue presented in this story people would be taxed twice on their taxes paid….essentially taxing them for paying their taxes.

  5. Dave Clark says:

    As the Wisconsin income tax rates start at 4.00% and rise to 7.65% at $320,250, I don’t see how someone earning $1,1 million is only paying 4.8%. Further, if you are calculating the Wisconsin tax burden, it doesn’t make sense to use the Federal Deduction offset that is a matter of federal policy. This chart doesn’t address taxes in total where the Federal income tax burden may be two to three times higher for those in higher income tax brackets, much of which circulates back to the state. The total state and federal income tax burden for those in the top 1% is probably about 40% of their income. Depending on one’s bias I suppose that could be regarded as too much or too little but this chart just makes for convenient headline.

  6. Tom D says:

    Dave Clark (post 5):

    You say “I don’t see how someone earning $1,1 million is only paying 4.8%.”

    Those numbers ($1.1 million and 4.8%) appear nowhere in the article and nowhere in the paper linked from the article.

    Where did you get those numbers?

  7. AG says:

    No bias here folks, keep moving along. Nothing questionable about the information presented. Don’t you worry about the actual data, just trust us. The rich are evil and stealing from the middle class.

  8. Vincent Hanna says:

    Someone woke up on the wrong side of the bed this morning! AG has the grumpies. Great post though. It gives one ample evidence with which to question the piece and clearly proves without a doubt that the author despises rich people. You use sound reasoning and solid data to support your arguments. Keep up the great work Status Quo Defender!

  9. AG says:

    Vincent, I would have loved to, but they haven’t given us any data to argue with to begin with. I can’t even tell you what sources of taxes they use for their position on the topic. And lets be real, even if I did give data, you’d just tell me I’m a status quo defender who hates poor people. Which… is the response I got from you anyway. I just helped us skip to the end this way.

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