OZAUKEE PRESS EDITORIAL: Wisconsin tax cut should be more than candy for the crowd

Politicians tend to treat tax cuts like the candy some of them toss to spectators along a parade route—a bit of confection to keep voters happy.

But lately the recipients of tax treats are finding they’re not so sweet. Many Americans seem to have a sour attitude about the federal tax cut that was implemented in 2018.

That’s because it is becoming clear that the tax cut was huge and puny at the same time—huge in the total reduction of $1.5 trillion in taxes, puny in the tax decrease seen by taxpayers with middle-class or lower incomes.

Taxpayer angst is being exacerbated by reports that tax refunds are smaller than many payers expected due to adjustments in withholding rates when the tax bill became law.

Most taxpayers understand that tax refunds are not gifts from the government, and theoretically they should be pleased that the reduced refunds mean they overpaid their taxes by a smaller amount than usual.

But many say the refund surprise rankles because they barely noticed any impact from the tax cut in their paychecks.

The tax cut was underwhelming for most Americans because the bulk of it benefited corporations and people occupying the top tiers of personal wealth.

The corporate tax reduction did give a burst of energy to the economy and the stock market.

Yet many economists agree with William Gale, a senior fellow in economic studies at the Brookings Institution, who described the impact of the new tax law, which increases the national debt substantially, as “making current rich people better off at the expense of lower-income households and future generations.”

This may explain why a poll taken by Fox News came up with the believe-or-not finding that the tax cut was less popular than Obamacare.

In any case, no one seems to be calling it a “middle-class tax cut” any more.

That term is on the tip of many tongues in Madison, however, where both the Democratic governor and the Republican leaders of the Legislature are working on plans to reduce state income taxes paid by middle-class families by about 10%.

The Legislature, unfortunately, went off half-cocked with the Republican plan last week when the Assembly and Senate passed a tax cut paid for entirely by spending the state’s surplus.

The action was premature, its timing out of whack because the 2019-2010 state budget has not yet been proposed, much less debated. When the budget is adopted, the surplus, now almost $700 million, will certainly be smaller. Restoring adequate state funding for public schools and the University of Wisconsin system alone is going to take a big chunk of it.

Even some members of the Republican majority questioned their leaders’ haste in pushing the tax cut before they knew how much of the surplus will have to be spent on essential state needs.

For his part, Gov. Tony Evers has signalled that he will likely veto the tax bill for that reason.

The signal from Republican legislative leaders is that they intend to apply their own version of a veto to the tax cut the governor is expected to propose because it would be funded in part by reducing a tax perk the Legislature gave to manufacturers and agricultural interests in 2011.

The Manufacturing and Agriculture Credit sharply reduced state taxes for qualifying businesses and their owners, resulting in more than $1 billion in lost tax revenue since it has been in effect. Democrats claim that most of this tax benefit goes to recipients who earn more than $1 million a year.

There is no data to support the GOP claim that the tax break creates jobs, though it’s reasonable to think that by virtually eliminating states taxes for some manufacturers it could be influential in attracting businesses to Wisconsin. Yet it didn’t attract Foxconn; it took a $4 billion taxpayer subsidy to do that.

The manufacturing credit should be fair game for negotiation in the coming tax deliberations.

Reducing it and applying the savings to a tax decrease for Wisconsin families could lead to the type of tax cut Republican Sen. Alberta Darling of River Hills described recently—one that “isn’t for trillionaires. It’s not for the rich. It’s not for the super rich. It’s for the middle class.”

That would be a refreshing contrast to the misdirected federal tax cut.


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Ozaukee Press

Wisconsin’s largest paid circulation community weekly newspaper. Serving Port Washington, Saukville, Grafton, Fredonia, Belgium, as well as Ozaukee County government. Locally owned and printed in Port Washington, Wisconsin.

125 E. Main St.
Port Washington, WI 53074
(262) 284-3494


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