MADISON, Wis. – Contrary to the left’s claim that Republican Gov. Scott Walker’s tax cuts have only helped the rich, a new report by the Wisconsin Taxpayers Alliance finds most taxpayers have seen their income taxes decline during the Walker era – some significantly.
And the rich didn’t make the cut.
The nonprofit, nonpartisan group’s study found middle-income earners who made between $20,000 and $50,000 a year saw their income taxes drop by 32 percent from 2008 to 2014, the latest data available. Their average bill dropped from $688 in 2008 – during Democrat Gov. Jim Doyle’s last term in office – to $467 in 2014, the final year of Walker’s first term.
Taxes fell 7.6 percent over the period for filers with annual incomes between $50,000 and $100,000, according to the study. Their tax burden declined from $3,167 to $2,926.
Todd Berry, president of the Wisconsin Taxpayers Alliance, acknowledges 2008 and 2009 were trying times for state budgets everywhere. Doyle and the Democrats responded by raising taxes in the 2009 budget.
But in 2013-14 in particular, Walker called for sweeping tax cuts and the Republican-controlled Legislature complied, thanks in large part to better-than-expected revenue.
“They don’t get much credit for it but they really deserve credit for it,” Berry told Wisconsin Watchdog this week on the Vicki McKenna Show on NewsTalk 1310 WIBA. “(It was) one of the first times I can remember in my 30, 40 years of watching the income tax that they actually cleaned up the income tax law a little bit, got rid of some of the stuff people aren’t using.”
Walker and the Republicans received only scorn and spin from their political foes.
Assembly Minority Leader Peter Barca, D-Kenosha, has called the tax cuts a giveaway for Wisconsin’s wealthiest.
“If this is anything like the Republicans’ past tax plans, it will primarily benefit the wealthy and not have an impact on most Wisconsin families,” Barca said as Republicans promoted another round of tax cuts in 2014.
In fact, a new top tax bracket created by controlling Democrats in 2009 led to a 5.7 percent increase in income tax liability for filers earning more than $500,000 a year. Their taxes climbed from $74,107 in 2008 to $78,345 in 2014.
“By far the largest percentage reduction was the $20,000 to $50,000 range. Surprisingly the tax burden actually went up at the really high range,” Berry said.
Individuals with income under $20,000 saw a cut in their refundable tax credits due to changes in tax law. As a group, these filers do not pay income tax, but the state writes them a check thanks to the tax credits.
In 2013, all tax rates were reduced and the number of tax brackets was reduced from five to four.
The top rate was trimmed from 7.75 percent to 7.65 percent, while the bottom rate dropped from 4.6 percent in 2012 to 4 percent in 2014.
Still, there has been little will to bring significant tax reform to the table.
Berry said the state income tax is essentially one of the largest government regulations anyone faces, and Wisconsin remains one of the most tax-burdened states in the nation.
The Badger State in 2013 ranked 7th in percentage of income taxes claimed, according to the U.S. Census Bureau. Wisconsin ranked 11th, at $1,262 in per capita income tax collected.
“If we want to reduce that burden, then we have got to make it a lot easier and quicker and less emotionally draining to file a state income tax return,” Berry said. “Unfortunately, partisans on both sides of the aisle love to propose little deductions and exemptions and credits so they can have a press release. The problem is that that just keeps adding to the instructions and to the length of the form.”