Proposed Tax Cut Would Cover First $200K For Everyone

Governor Scott Walker says his budget will cut income taxes for the middle class. But Wisconsin’s millionaires and billionaires could potentially see their taxes cut, too, under Walker’s proposal.

The governor says he wants a tax cut focused on incomes in the middle – those above $20,000 and less than $200,000. But tax expert Jack Norman says that’s misleading: “I think this is hiding – and I would say deliberately hiding – the fact that it’s still going to benefit people of any income all the way up to the billionaires, because your first $200,000 of income would benefit from the tax cut.”

In other words, Wisconsin’s wealthiest would still pay the highest tax rate on most of their income. But even billionaires would get a tax cut on their first $200,000. Norman, who’s worked for a variety of progressive groups, contends there’s a reason Republicans don’t mention this, “I think that the politicians understand that the public isn’t interested in tax breaks for the super rich.”

Motives aside, the reason this would happen is a simple reality of the way the tax system works. Todd Berry with the Wisconsin Taxpayers Alliance says you have to remember that people get different chunks of their income taxed at different rates, so rate cuts in the middle still affect taxpayers at the top. Berry says there are more targeted ways you could structure a tax cut, but he says politicians tend to focus on rates, “Lowering the rates in the broad middle is something that the public and the press can understand. You know, it’s simple and direct.”

Governor Walker spokesman Cullen Werwie says Walker will release details of his tax cut in his budget later this month.