Tax cuts passed by Wisconsin lawmakers in recent years have disproportionately gone to the wealthy, according to a new analysis by the Wisconsin Budget Project.
The analysis reviewed the combined effect of 13 personal income, corporate income and property tax cuts passed between 2011 and 2016 that reduce state revenue by $1.7 billion this year.
The analysis used three different methods to compare the size of the tax cuts received by different income groups. All three methods showed that middle-class taxpayers receive less from the combined tax cuts than the wealthy, and that residents with the lowest incomes receive the least:
• Measured as a share of revenue loss to the state: The top 1 percent receive a combined tax cut of $420 million - about 24 percent of all shared tax cuts - in 2017, more than 10 times as large as the $40 million tax (2 percent) cut taxpayers in the bottom 20 percent of taxpayers received, even though there are 20 times as many in the group with the lowest income.
• Measured in terms of average tax cut, taxpayers in the top 1 percent by income - a group with an average income of $1.7 million - receive an average 2017 tax cut of $10,015, compared to $175 for taxpayers with incomes in the lowest 20 percent, a group with an average income of $15,000.
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• Measured as a share of the taxpayer's income, the tax cuts the top 1 percent receive (0.70 percent of income) are more than twice as large on average as the tax cuts taxpayers with the lowest incomes receive (0.33 percent of income). This comparison takes into account the relative sizes of the incomes of the different groups.
Anyway you slice it, the lion's share of these tax cuts have gone into the pockets of people who already have a lot of money," said Tamarine Cornelius, author of the analysis.
By directing the bulk of the tax cuts at taxpayers with high incomes, lawmakers further tilt Wisconsin's tax system in favor of the wealthy, the study concludes. In Wisconsin, as in most other states, taxpayers with the highest incomes pay a smaller share of their income in state and local taxes on average than taxpayers in other income groups, it states.
"The top 1 percent is saving more on taxes each week from these tax cuts than the lowest income group will save over the course of the whole year," she said. "When the tax cuts are considered as a whole, it's striking how much of the benefit is going to a group with an average income in the millions of dollars. People who aren't among the very top earners aren't getting as much out of these tax cuts."
The analysis is based on information from the Institute on Taxation and Economic Policy. The Wisconsin Budget Project is a nonpartisan research group focusing on tax and budget policy. For the full analysis, go to "Missing Out: Recent Tax Cuts Slanted in Favor of those with Highest Incomes" at www.wisconsinbudgetproject.org .
