By their very nature, across-the-board tax cuts will almost always benefit the wealthy.
So it’s no surprise that upper-income households and large landowners in Wisconsin will grab the lion’s share of the $504 million in income and property tax cuts proposed by Gov. Scott Walker in his State of the State address on Wednesday.
For example, middle class households in Wisconsin (incomes between $37,000 and $66,000) would see an average cut of $117 while the top 1% ($380,000 or more) would enjoy an average $951 in savings.
Those figures are from the Institute for Taxation and Economic Policy, which did an analysis for the Wisconsin Budget Project, a wing of the Wisconsin Council on Children and Families.
Moreover, because $406 million of the tax cut is aimed at the property tax levy — a move accomplished by changes to funding for state technical colleges — large landlords, real estate developers and business owners will realize a bigger chunk of the savings.
Madison-based American Family Insurance, for instance, which owns some $144 million worth of property in the city, would save about $100,000 on its property tax bill under a calculation using prosperity.WI.gov.
But Budget Project director Jon Peacock says the issue isn’t so much the distribution of the tax cuts, which he admits are actually more evenhanded than the tax cuts in the last budget bill. Walker’s latest plan reduces the tax rate for the bottom bracket from 4.4 to 4.0 percent, a nod to those who could really use more money in their pockets.
The bigger issue, Peacock says, is the one-time use of the projected state surplus which he warns will boost the structural deficit in 2013-2015 to $825 million.
“We don’t want to over pitch these tax cuts are overly regressive because they’re not,” he says. “But we are concerned that Governor Walker’s plan ignores holes in the current budget and creates a deeper hole in the next one.”
Those sentiments are being echoed by some Republicans who say approval of the Walker plan isn’t a slam dunk, according to the Milwaukee Journal Sentinel.