Republican Class Warfare

Going back decades, Republicans like George W. Bush accused Democrats of “class warfare.” Democrats want to “soak the rich,” Republicans would charge.  

The reality is that Republic federal tax policies, as exemplified by the Trump tax cuts, were skewed to benefit the wealthy. This only exacerbated the wealth gap in America, which is the widest its been in more than a century.

Back when Republicans were the party of the wealthy this kind of class warfare made sense. But by 2016 it was the nation’s poorest counties who were voting for Donald Trump and in the 2020 election that difference was even larger, with counties voting for him having just 29.7% of the nation’s wealth.

So you might expect Wisconsin Republican to target their tax policies to benefit poor and middle class people, particularly in rural areas. But they don’t. A case in point is their latest tax cut plan, to take advantage of a huge unexpected state surplus. 

The proposed tax cut is massive, totaling $3.4 billion income. But little of that goes to the poor or middle class. The nonpartisan Legislative Fiscal Bureau (LFB) analysis found that more than 75% of households in Wisconsin have incomes of $80,000 or less, but would get just 16% of the gains from the tax cut. By contrast 84% of the tax savings would go to the top 25% of Wisconsin households by income, ranging from $80,000 to more than $1 million.

The average tax reduction for the state’s wealthiest 25% would range from about $450 to $2,935 a year, increasing along with incomes, the analysis found. By contrast, the majority of taxpayers earning $40,000 or less would see no cut in taxes.  

This is hardly the first time Wisconsin Republicans skewed their tax cuts to benefit the wealthy. One of the first things new Gov. Scott Walker did was to slash the earned income tax credit for the working poor, something Republicans like Tommy Thompson once championed. 

The wealthy, meanwhile, were getting lots of tax breaks. In Walker’s first term, the Republicans passed $36 million in capital gains tax breaks, and 46% of those breaks went to the top 2% of earners in Wisconsin, according to the LFB. 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.

Year after year, Walker and the Republicans passed and applauded themselves for new tax cuts that were consistently skewed toward the wealthy. Perhaps the most dramatic was the Manufacturing and Agriculture Tax Credit: 79 percent of the credit goes to individuals with an income of more than $1 million, and 21 individuals with an adjusted gross income of $30 million or more a year received $38.9 million in tax breaks, the Fiscal Bureau found.

How can Republicans get away with repeated tax giveaways to a wealthy minority of voters? One technique is a variant of the trickle down theory. Republicans would argue that the manufacturing and tax credit was targeted to “job creators,” who would funnel those savings into job creating enterprises. In fact the tax credit had no impact on jobs.

Similarly Republicans argue that capital gains tax cuts skewed to help the wealthy will result in more investment in the economy, though there is little evidence to back this up.

Republicans are giddy about the latest tax cut, certain it will put Gov. Tony Evers on the defensive, opposing a historically huge tax cut. The governor wants to keep “your money” rather than giving the surplus “back to the people,” they will charge.  

They have pointed to the fact that most Wisconsin taxpayers are in the income tax bracket that the Republican plan cuts from 6.27% to 5.3%. Which is true. But most of the benefit will go to wealthiest people in this group, those earning more than $80,000 per year. Republican Senate Majority Leader Devin LeMahieu bragged that this will move Wisconsin “closer to a flat tax” which is to say it will be an even less progressive tax system. 

But perhaps the most successful way Republicans sell tax cuts with little benefit for many of their voters is by selling class resentment. Not of the rich, but of people like government workers: Act 10 was a major slap down with cuts to public worker salaries and benefits. Or of the urban poor, who are portrayed as the only beneficiaries of Food Share benefits or the earned income tax credit though they benefit all the working poor in the state. As Walker once confessed to billionaire Republican Diane Hendricks, you use a “divide and conquer” strategy. Class resentment is sneakier and more subliminal than class warfare. And it’s proved to be very potent in Wisconsin.