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A closer look at proposed income tax cut

By Lou Hillman, lhillman@wkbt.com
Published On: Feb 26 2013 08:59:12 PM CST
Updated On: Feb 26 2013 11:03:32 PM CST
LA CROSSE, Wis. -

Almost all Wisconsin residents can look forward to some extra money in their wallet under a proposed income tax cut.

Governor Scott Walker says his plan will help the middle class most, but do the numbers tell a different story?

The average person would save about $83 per year, according to an analysis by the non-partisan Legislative Fiscal Bureau. It would be the first time since 1999 that Wisconsin’s income tax rates would be cut across the board.

“All of that is going to help put more money in people's pockets and make the state of Wisconsin more competitive economically,” said Richard Chandler, secretary of the Department of Revenue.

Chandler says Governor Walker's proposed $343 million tax cut will give those earning the least the most help.

“The biggest percentage reductions are for the middle class. The middle class is getting a bigger share of the reductions,” he added.

The analysis by the Legislative Fiscal Bureau supports his argument, as long as you are just looking at the cut by percentage. If you look at the overall dollar amount, however, the report says about half of the tax cut will go towards those making $100,000 or more.

“You’re paying more in taxes so if you get a tax break, you're going to get a bigger break because you're already paying a higher percentage and a higher dollar amount," said Mike Haupert, an economics professor at UW-La Crosse.

Haupert says studies have shown that tax breaks to the lower earners provide a bigger economic boost than those to who earn more.

“These people are now getting a dollar that goes a lot further for them because it allows them to put food on the table, heat their homes and pay their mortgage,” he said.

Still, Haupert says it is fair to call Governor Walker’s plan a “middle class” tax cut.

"Because it effects everybody that we would call middle class," said Haupert.

“It’s going to reduce taxes for taxpayers at all income levels and nobody's taxes are going to be going up,” said Chandler.

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