300,000 State Residents Would See Tax Hike
U.S. Senate tax plan gives huge gains to wealthy, hikes taxes on 1 in 11 people.
Nearly 300,000 Wisconsin taxpayers would pay more in federal income taxes under a plan released on November 9 by Republican leaders in the U.S. Senate. That means about nine percent of all taxpayers in the state, or 1 out of 11 taxpayers – would pay more under the Senate plan. And if you consider who will wind up paying for the deficit-financed tax cuts in the long run, the number of low- and middle-income Wisconsin residents who would be worse off under the bill is likely to swell.
About 89,000 of the Wisconsin taxpayers with tax hikes are in the bottom 60% of the income spectrum, with incomes of less than $95,000. The average annual tax increase for those taxpayers would be $680. Figures are for 2027, when the permanent effects of the tax changes are in force.
While a non-insignificant number of Wisconsin taxpayers would see their taxes go up under the Senate plan, on average taxpayers would receive a tax cut – with the wealthiest getting by far the biggest tax cut. Wisconsin taxpayers in the top 1% would receive an average tax cut of nearly $50,000. That dollar amount represents a tax cut more than 250 times as large as the tax cut that would be received by the bottom 20% by income. In fact, the average tax cut that would be received by the top 1% represents more than the annual average income of Wisconsin taxpayers in the bottom 40% of the income spectrum.
Wisconsin taxpayers with low- and middle-incomes are likely to be worse off under this tax bill– not just compared to the richest taxpayers, but compared to their current standard of living – if you consider how the cost of the plan will be offset. This article in Medium explains why:
“[T]his tax bill isn’t fully paid for. It increases deficits over the next decade by $1.5 trillion. And while there are many low- and middle-income Americans paying higher taxes under the legislation, all income classes get a tax cut on average under the Senate plan — for now. And, it is just for now. Eventually, these tax cuts will be paid for, and then the question will be who covers the bill.
The Republican leadership has suggested how they intend to pay for these tax cuts and reduce federal deficits — through cuts to programs and services that disproportionately benefit low- and middle-income Americans. As a result, it’s not just that low- and middle-income Americans’ living standards won’t go up as much as those at the top. It’s that their living standards are likely to suffer in the long-run as they are left holding the bag.”
The Institute on Taxation and Economic Policy has more information about how the Senate tax plan would affect taxpayers in Wisconsin and other states.
For a summary of both the Senate and House tax plans, read this Bloomberg comparison of the provisions included in the bills.
In the Senate, the tax bill heads to the Senate Finance Committee, while the House plans to vote on its bill this week. Republican leaders in Congress are pushing an aggressive timeline, setting their goal for passing tax legislation before the end of the year.