Tax cuts to end up in the hands of Walker's favorite people: his donor baseAt first, Gov. Scott Walker’s proposed income tax cuts for the state seemed like such a good idea. Even the most hardened liberals had to admit that lowering the rates for the bottom three income tax brackets while keeping the top two rates intact made sense.
Such a move, at first glance, seems like a progressive form of taxation. Unfortunately, that’s not how Wisconsin’s tax system works.
When you cut the rates of the bottom brackets, it results in not just a tax cut for the poor and middle classes, but a tax cut for the wealthy as well. Any income earned, whether it’s earned by someone making $50,000 or $500,000, up to the top income threshold of that third bracket (up to $214,910) sees a reduction in taxes. So the first $214,910 of a person earning half a million dollars annually, for example, is also taxed less.
The result is that everyone in the state, not just the incomes in the bottom three brackets, see their income taxes drop.
How significantly? It seems as though the tax proposal that Walker has trotted out as beneficial for the middle class will largely go into the hands of the top five percent.
The wealthiest in this state stand to reap the greatest benefits of all from this cut. As the Journal Sentinel points out, the top five percent of income earners in the state will receive 20 percent of the overall tax cut.
The top fifth of income earners -- those making roughly $100,000 or more -- would see half of the total income tax cut that Walker is proposing wind up in their own pockets.
That means that 80 percent of taxpayers would only receive half of the proposed cuts.
What of the bottom 40 percent of income earners? What’s their share of this tax cut?
They don’t even receive 10 percent share of the tax cut.
Much has also been made about the “average” Wisconsinite’s tax cut, which would be about $83, or $122 for a couple filing jointly. But the “average” tax cut also takes into account the cuts that the wealthiest receive, which diminishes the reality of the situation.
It’s much more prudent to look at the median income earners’ tax cuts to understand how most taxpayers would be affected.
The median income for a Wisconsin family is approximately $50,000. A family earning this much ought to receive a significant tax reduction, at least according to Gov. Scott “I’m-cutting-the-middle-class’s-taxes” Walker.
In reality, however, it’s a measly $74, or about $6.17 per month.
It’s no wonder why Gov. Walker is pushing for this change in our tax code. His base is set to receive the largest chunk of it. The rest of Wisconsin, on the other hand, will receive table scraps comparatively.
With the cuts unlikely to spur any real economic stimulus, it's clear that Walker's tax schemes are meant to help those closest to him: his donors.