Create an Economy for Everyone
Democrats propose a middle class tax cut, paid for with taxes on the wealthy.
Manufacturing
Tax breaks for the most wealthy continue to be the Republican Party’s central economic plan. TrumpCare contains $600 billion in tax cuts for America’s wealthiest. Speaker Vos and the Assembly Republican Caucus recently introduced a transportation proposal that would institute a flat income tax in Wisconsin, cutting taxes for millionaires by 50 percent.
Wisconsin Republicans slipped the biggest corporate tax giveaway in Wisconsin’s history, the Manufacturing and Agriculture Tax Credit (MAC), into the 2011-2013 budget at the very last minute. Designed to nearly eliminate state tax responsibility of manufacturers and big agricultural producers, the MAC is projected to cost $654 million over the next two years. However, businesses don’t have to create one job to get it, and, in fact, they can outsource jobs and still claim this credit.
No surprise, the MAC largely benefits Wisconsin’s wealthy, with 88 percent of this money going to individuals making more than $500,000 annually. Eleven multi-millionaires who make more than $30 million each, will receive $22 million in tax breaks. Despite initial promises of a modest tax cut, in the first seven years since is enactment, MAC has cost Wisconsin taxpayers $805 million dollars more than they originally promised and with less than optimal results.
Despite the massive wage infusion this tax gives to the most-wealthy, it isn’t trickling down to bump up the wages of most working people. Recently, we learned that overall, private sector wage growth has decreased, with manufacturing wages plunging 5.3 percent. And despite the full implementation of this giveaway, Wisconsin still lost 3,777 manufacturing jobs between 2015 and 2016 and had the worst job creation performance since the recession in 2008-2009.
We pay for this investment in Wisconsin’s middle class by eliminating MAC and creating a fifth tax bracket for individuals earning more than $500,000 and couples making more than $1 million. It probably is no surprise that this group pays the lowest percentage of their income in local and state taxes.
Our proposal reflects the opinions of the majority of Americans who believe that large corporations and wealthy families should have to pay their fair share.
The MAC is a prime example of Republican policy makers ignoring the need to invest in the working families of our state who are suffering from declining wages. Until most working people receive a bump up in wages, our economy will only work for those at the top. What we really should be creating is an economy that works for everyone.
Chris Taylor, D-Madison, represents District 76 in the Wisconsin Assembly.
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The economic theory of tax breaks on the wealthy rests on the premise that these individuals won’t increase their consumption and will instead investment their money in the state’s economy. This theory also assumes that these individuals will allocate resources more efficiently than the state because they are incentivized by profit. That’s a fair assumption.. bureaucracy is pretty inefficient and poorly incentivized. What would be a really interesting study would be to answer the questions:
1) Where are these tax breaks being spent? What percentage of these tax breaks find their way back to the state of Wisconsin as investments? Where do wealthy Wisconsin investors, in general, send their money?
2) Compare the percentage of returned investment from tax breaks to the efficiency of our state’s bureaucracy. Which one wins out?
3) How much investment does Wisconsin attract from out-of-state investors? Which areas (geography) is this investment located in?
4) What percentage of a middle-class family’s income is spent on consumption of Wisconsin-made goods? How would a tax-break affect these numbers?
These questions definitely don’t represent the entire picture but would give a solid comparison between whether it really is in the best interest for Wisconsin to cut taxes on the wealthy.
I hypothesize that wealthy Wisconsinites are not very interested in investing with Wisconsin-based companies. These investors would instead turn their dollars towards high-growth areas of the country like California, Texas and New York. Reciprocation of these dollars from out-of-state investors would be diminished by the size of investments being sent out of Wisconsin. Essentially, my hypothesis would conclude that tax breaks in Wisconsin would function more or less as a stimulus package to already growing economies like Texas.
Chris Taylor wants to take from the rich and give to the middle class but she won’t touch the wealthiest of us all in Wisconsin. How will you Ms. Taylor take the wealth from Billionaire’s Herb Kohl and Judy Faulkner. They give to your party and your party gives them financial protection. How does raising the state income tax make Chris Abele poorer or Kohl and Faulkner? The answer is it does not. Most wealthy people pay no income tax and that is why they cheer Chris Taylor on protector of Billionaires.
Fun side notes:
Although Wisconsin was showing the greatest decrease in the percentage of households that fall into the Pew Research’s definition of middle class (which is not true as of 2014, her info is old), Wisconsin saw the greatest percentage increase of families rising above the defined level of “middle class.” (3.4% from 2000-2014)
Wisconsin also saw more than double the percentage of households move out of the middle class to go higher than it did see people fall below it. (3.4% and 1.5% respectively from 2000-2014)
Of all the surrounding Midwest states, the percentile income group to see the biggest gains since 2000 were those in the 95th percent except Wisconsin that saw the most improvement for the 80th percentile. In other words, the group seeing the most benefit in WI are households in the middle class, unlike everywhere else around us that has benefited the upper class most.
Wisconsin also has one of the largest, by percentage, middle classes in the nation. (49.7%, highest is Iowa at 50%)
From 2015: “Wisconsin’s middle class, once nearly the strongest in the country, has shrunk more than in any other state, according to a new report.”
http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2015/3/19/the-shrinking-middle-class-mapped-state-by-state
From the same group, they updated the report and released it earlier this year. In the updated report they use 2014 data instead of the 2013 data listed in your link. While WI was still in the bottom 10, it was no longer the worst.
If you want an economy for everyone, and not just the 1 percent.. Why on earth would you endorse HRC for President?!
That’s not really much comfort or anything to write home about AG.
Nope, just an interesting fact. If you only look at people dropping below “middle class” then we’re solidly in the middle of the pack. Again, not spectacular, but definitely not as horrible as saying we’re worst for decreasing size of middle class.
Ms. Taylor should introduce a bill stating if you own two houses you must allow government to seize one of your homes for the greater good of society.
The six or seven billionaires in Wisconsin pay near zero in income taxes under Democrats or Republicans so where do you provide the re venue for what ever your calling the middle class. Will you dream a billionaires tax, say 50 percent of their total wealth.