One Wisconsin Institute Report: ‘We’re Not Broke: The Truth About The Wisconsin Budget, Taxes and Governor Walker’s Phony Fiscal Crisis’

MADISON, Wis. — A comprehensive analysis authored by the non-partisan One Wisconsin Institute shows that despite claims from Gov. Scott Walker, Wisconsin is not “broke.” The Institute’s research contradicts Gov. Walker’s assertion, pointing out Wisconsin’s Gross Domestic Product has steadily rose the past twenty years and Wisconsin has plenty of overall wealth – but this wealth has shifted to those at the top of the income ladder, while Wisconsin’s tax structure is built around the middle class.

In addition, this discrepancy has led to tax revenues failing to keep pace with Wisconsin’s GDP, an over tax-burdened middle class, and budget shortfalls, instead of surpluses. One Wisconsin Institute is the research and education partner of One Wisconsin Now, a statewide progressive advocacy organization.

“It is common sense and fair that people benefiting the most within the economy should pay an amount in taxes proportional to that benefit and that clearly is not happening in Wisconsin,” said Scot Ross, One Wisconsin Institute Executive Director. “Our research indicates Gov. Walker’s agenda of tax breaks for big business and the wealthy, raising taxes on the poor, and slashing funding for our public schools and other life bloods of the middle class will likely not solve the problems of Wisconsin’s overburdened middle class and exacerbate the gap between the wealthy and the middle class.”

The major findings of the 20-page report include:

• In Fighting Bob La Follette’s day, corporations paid 70 percent of the state revenues, today it is 6.9 percent and 2/3 of Wisconsin corporations don’t even state income taxes. The cuts to the business tax burden of the past 30 years have accompanied a steady drop in American manufacturing jobs and a stagnancy in American wages.
• From the end of WWII to the mid-80s, the top income tax rate in Wisconsin was 10 percent or higher most years, but now it is only 7.75 percent.
• A “Pain Index,” based on the percent of a county’s median household income goes to pay state and local taxes finds that 15 counties, including Brown, La Crosse, Kenosha, Racine, Eau Claire and Rock Counties, are in “severe pain” because over 13 percent of their median income goes toward state and local taxes. This comes at the same time the burdens for business have fallen, particularly on property taxes.
• At the Federal level, billionaires pay a lower tax rate than the average family, potential revenue that is lost also to the state. And, like Wisconsin, Federal revenues have not kept pace with the Federal GDP.
• The largest expenditure by the Federal government is not defense spending or education, but “tax expenditures” on the wealthy. (“Tax expenditures” is the budgetary term the Joint Finance Committee uses for tax breaks and loopholes that have the same budgetary effect as any other spending.)

“Gov. Walker is correct that the average Wisconsin family is spending too much of their income on state and local taxes, but he’s ignoring the million pound elephant in the room: The vast amount of income and wealth has shifted dramatically to those at the top of the income ladder,” said Ross. “Unsurprisingly, while conservative tax policy has rewarded wealth and inheritance over ingenuity and work, Wisconsin’s tax burden has shifted to the middle class and the poor. We live in an America where 400 people control more wealth than half of the people in the country and the research more than suggests Gov. Walker’s plans push us further down this road.”