Wisconsin’s Wealth Gap Grows Worse

The economy is in decline, but not for billionaires. They are getting richer. 

Take Wisconsin’s richest three people: billionaires John Menard, Jr., Diane Hendricks and Herbert Kohler, Jr. All three saw their net worth explode in value during the first three months of the pandemic, by 65 percent for Menard, 39 percent for Hendricks and 29 percent for Kohler. 

That’s right, Menard’s net worth ballooned from $11.5 billion to $19 billion, Hendrick’s net worth rose from $6.9 billion to $9.6 billion and Kohler from $5.9 billion to $7.6 billion during just the three months of the pandemic, from March 18 to June 18, as a recent report by the Americans for Tax Fairness (ATF) and two other groups found. The analysis is based on the Forbes magazine’s annual roundup of the wealthiest people in America 

The increase in value for billionaires is tied to a booming stock market that continues to see the rich get richer even as middle and lower class Americans, who own almost no stock, have been devastated by the COVID-19 epidemic. An estimated 40 million Americans have lost their jobs and 27 million have lost their health insurance.

Hardest hit are low wage workers who are disproportionately minority. As a new report by the Wisconsin Economic Development Corporation notes: “Minorities nationally are overrepresented in industries vulnerable to pandemic-related closure, comprising 62% of employees in the personal care sector, 63% in dry cleaning and laundry workers, and 59% of hospitality employees.”

Nationally, over the first three months of the pandemic, America’s 600-plus billionaires saw their combined wealth increase by $584 billion or 20 percent—rising from $2.948 trillion to $3.531 trillion, the study found. That included five other billionaires in Wisconsin, H. Fisk Johnson, Helen Johnson-Leipold, S. Curtis Johnson, James Cargill, II and Judy Faulkner, who saw their wealth rise in three months by anywhere from 4 percent to 52 percent. 

All told, the study found, the state’s eight billionaires saw their combined net worth rise from $39.4 billion to $53.6 billion — in just three months.  

The wealth is also growing because of tax changes that benefit them. The Trump tax cuts, Forbes has reported, have meant that billionaires now pay less in taxes than the working class.

And a $135 billion handout slipped into the $2 trillion CARES pandemic relief law enacted in late March “primarily benefits millionaire business owners and costs three times more than the law spends on social safety net programs and exceeds the amount expended on hospitals and public health,” the ATF report noted.

Meanwhile state and local governments, facing huge declines in taxes collected, are contemplating cuts in service that could have the worst impact on poor and middle class people. One bright spot for Wisconsin was the online sales taxes have increased, but it turns out that the Republican-led state Legislature passed a law requiring that all such revenue must be used to lower income taxes paid. That means 20 percent of tax relief will go the top 2 percent of the state’s taxpayers, with none of it going to lower income taxpayers.

Wisconsin Republican legislators and the Gov. Scott Walker also passed the Manufacturing and Agriculture Credit, which nearly wiped out state income tax liability for manufacturers and agricultural producers in Wisconsin. Nearly all the value of the tax break goes to the very wealthy. In fact, just 11 claimants, all of which had incomes of $30 million or more, received an estimated combined tax break of $22 million in 2017.

Walker and Republican lawmakers piled on the benefits for the wealthy in a controversial lame duck bill, adding at $60 million tax cut that mostly benefits the top 20 percent of taxpayers. That likely includes members of the Wisconsin Supreme Court, whose conservative majority has ruled against lawsuits arguing the lame duck laws were unconstitutional.  

“It’s immoral that billionaires are getting richer and richer while average Americans are treading water if they are lucky, or drowning, from the economic crash caused by the pandemic,” said Frank Clemente, executive director of Americans for Tax Fairness, in a statement about its report. “Congress needs to urgently provide a major new financial aid package to ensure working families can recover and critical state and local services can keep being provided.”

The House HEROES Act passed in May would repeal the tax break included in the March pandemic relief bill that is giving an average tax cut of $1.6 million this year to 43,000 millionaires and billionaires, according to the Joint Committee on Taxation (JCT).

The HEROES Act would had great benefits for Wisconsin, the report noted, with the state gaining::

• $8.5 billion out of a total of about $500 billion in direct aid to state governments over the next two years for critical services.
• $7.2 billion out of a total of $375 billion in direct aid to local governments over the next two years for critical services. 
• $1.9 billion out of a total of $117 billion in increased federal Medicaid funding over the next two years.
• $1.4 billion out of a total of $90 billion for public schools for grades K-12 and public colleges and universities.

State residents will also get their fair share of an extension through the end of the year of the $600 per week in enhanced unemployment benefits that are expiring at the end of July; renewal and increase in direct assistance checks to individuals and families of $1,200 per each adult and child, up to $6,000 per household; and $100 billion to protect renters and homeowners from evictions and foreclosures.

But the bill is unlikely to be passed by the U.S. Senate, where Wisconsin Democrat Tammy Baldwin supports it and Republican Ron Johnson opposes it.