Price of Republicans’ big tax break for businesses nears $3 billion
The credit does not require proof of job creation and is heavily geared toward Wisconsin’s wealthiest filers.
A Republican-enacted tax credit that primarily benefits millionaires and businesses has cost the state more than $2.8 billion over the past decade, according to a february note of the non-partisan Legislative Tax Bureau (LFB). The memo was written for Senate Majority Leader Devin LeMahieu (R-Oostburg), who asked the LFB to compile all tax policy changes since 2011, when Republicans took power in the Legislative Assembly , through the current fiscal period that ends in 2023. It shows Manufacturing and Farm Credit (MAC) cost the state $2.86 billion during this period.
The credit has a name that implies benefits for a wide range of farmers and manufacturers rewarded for job creation, but the progressive research group Wisconsin’s draft budget showed how filers with income of $1 million or more, who represent only 0.2% of all filers, got 76% of the total credit, with no proof of job creation required.
Wisconsin Budget Project Director Tamarine Cornelius said in 2017, for example, that 11 of the filers who claimed the credit each had incomes of more than $30 million and each had their taxes reduced by more than $30 million. $2 million.
Republicans claimed the MAC would cost the state $617 million in its first seven years. Instead, it starved the state of $1.4 billion by 2019, a cost that doubled to $2.8 billion in the new report through 2023.
Reviewing the rest of the LFB note, Cornelius posted on Twitter that Republican tax changes over the 12-year period include:
- “$635 million for capital gains tax cuts, which favor wealth income over labor income. About 75% of capital gains go to the top 1% of taxpayers.
- “$270 million for an income tax deduction for private school tuition. This is separate from the tuition voucher program and it has no upper income limit for eligibility. Filers who earn more than $100,000 get 2/3 of that credit.”
“There’s more,” Cornelius continues, “but you get the picture. Over the past decade, tax changes have robbed our schools, communities, and health care system of billions of dollars and redirected that money to the rich and powerful who have rigged the system to their own advantage.
Republicans are likely to use other information in the memo as part of their reelection campaigns, emphasizing certain tax benefits, such as the increase in the standard deduction for couples filing jointly (cost: 146 million) or granting a deduction for teachers’ expenses (cost: $8.8 million). But as Cornelius noted, tax cuts don’t happen in a vacuum and someone else pays more taxes to make up the difference or, more likely, fewer dollars are available to provide services .
Some Republicans want to take the idea one step further and eliminate state income tax altogether — a move that could starve public schools, medical assistance and other public services.
State Sen. Roger Roth (R-Appleton), a candidate for lieutenant governor, recently sought co-sponsors for such a proposal. According to Department of Revenue.