News Column

Top Earners Would Benefit Most From GOP-backed Tax Cuts: Report

June 4, 2013

A Republican lawmaker's proposal to expand income tax cuts beyond those initially proposed by Gov. Scott Walker would mostly benefit taxpayers making more than $100,000, a nonpartisan analysis released Monday found.

The average tax cut for 2015 under the proposal would be nearly $300, compared to the $83 average for an average taxpayer under Walker's plan, according to the analysis.

The state's Legislative Fiscal Bureau memo was released by Democratic lawmakers Monday.

The report came as Republicans who control the Legislature wrangled over major budget items in closed door meetings, negotiating last-minute deals on cutting income taxes, expanding private voucher school programs, funding public schools and rejecting a federally funded Medicaid expansion.

All of those issues for the 2013-15 spending plan are expected to come before the Legislature's powerful budget committee this week. But Republican lawmakers had still not announced agreements on specific plans Monday evening, even as they prepared for Tuesday morning's budget committee meeting.

"We have a framework on all of it that we're kind of plugging different pieces into it," Joint Finance Committee Co-Chairman John Nygren said. "But we're not there on any of it."

The plan to overhaul the income tax code, proposed by Rep. Dale Kooyenga, R-Brookfield, calls for a more than $400 million tax cut on top of the $348 million cut originally proposed by Walker in his 2013-15 biennial budget plan, and collapses five tax brackets into three.

Under Kooyenga's proposal, if adopted, about 63 percent of the net tax reduction would go to those taxpayers with adjusted gross incomes of more than $100,000 annually once the plan was fully implemented in 2015, according to the fiscal bureau's memo. About 27 percent of the tax cuts would go to those making more than $200,000 annually.

The report said the average tax cut would be about $297 a year for taxpayers in tax year 2015, with 73.4 percent of taxpayers seeing a tax decrease and about 0.3 percent getting a tax increase.

The average decrease in 2015 would be $10 for those making $10,000 to $15,000 annually, and about $568 for those making $100,000 to $150,000 a year.

"This is a tax plan that by and large will benefit people that by and large make well into six figures. said Rep. Cory Mason, D-Racine, a member of the budget committee. "The richest one percent, if not fewer."

The tax increase is the result of the elimination of some tax credits under the Kooyenga plan. Kooyenga could not be reached for comment Monday.

No final deal had been publicly announced on the remaining budget issues Monday evening.

During budget negotiations, divisions have arisen between moderate Senate Republicans who think Walker went to far with his current budget proposal and more conservative Assembly Republicans who want to see the governor go further, including steeper tax cuts.

For example, 11 Assembly Republicans sent a letter to GOP legislative leaders late last week that warned they would not vote for the budget as written. The Republicans who wrote the letter say they want to see the budget include things like Kooyenga's tax cut proposal and a $500 million cut in bonding.

There are currently 60 Republicans in the Assembly. That means if those 11 who signed the letter voted against the budget, Republicans wouldn't have enough votes to pass it unless they could persuade some of their Democratic opponents to support it.

Among the key outstanding items expected to be discussed Tuesday:

--The size of the tax cut. Legislative leaders have said it will be at least $500 million. But whether it's the roughly $750 million proposed by Kooyenga is in question.

--Expanding vouchers and funding schools. A preliminary agreement reached last week would add $150 per pupil to the state's spending on schools, expand vouchers statewide, cap the percentage of vouchers issued in one district to 1 percent, cap the number of vouchers outside of Milwaukee and Racine to 1,000.

--Whether to hew close to Walker's Medicaid proposal, which would leave only those at 100 percent of the poverty level or poorer covered under the program. It would cost the state $52 million to implement largely due to giving up federal funding.

After the Joint Finance Committee completes work on the budget, it will go to the Senate and Assembly for consideration.

-- Reporter Matthew De Four contributed to this report.

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(c)2013 The Wisconsin State Journal (Madison, Wis.)

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Source: Copyright Wisconsin State Journal (Madison, WI) 2013


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