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May
2013
31

Gov. Walker, Rep. Kooyenga Want to Collapse Tax Brackets, Kick 100s of Millions to Wealthy Wisconsinites

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Recent state budget projections in Wisconsin show that there will be an influx of $500 million over the next two years. In Wisconsin, that can only mean one thing: a partisan divide over where the money should be allocated.  

Democrats hope to use the cash to provide aid for public schools while donor-loving Governor Scott Walker wants to give tax breaks to the wealthy, add to his “rainy day fund” and then leave the leftover scraps to schools.  Walker doesn’t even need to promote this Gatsbyian affront to the population, he has Rep. Dale Kooyenga (R-Brookfield) to do it for him.

If passed, Kooyenga’s plan would be the largest overhaul of the state’s income tax in decades.  His proposal would more than double Walker’s plan and cut a proposed $444 million in taxes and fees, most of which would benefit Wisconsin 1%ers.  

Kooyenga, who is 34, has decided to collapse tax brackets in the name of “simplification” so that lawyers and secretaries would pay the same amounts.  Via the Milwaukee Journal-Sentinel:

An initial estimate by a UW-Madison economist suggests that the top tier of taxpayers — those making more than $100,000 a year — would receive more than half the benefits from Kooyenga’s proposed tax cut. But the flip side of that estimate is that those same upper-income taxpayers are now paying more than half of the income taxes in the state.

“It’s nearly impossible to create a tax (rate) cut that doesn’t disproportionately lower taxes for upper incomes,” said Kooyenga, who wants to take a step to “flatten” Wisconsin’s progressive income tax.

The proposal by Kooyenga, an accountant, would eliminate a score of seldom-used tax credits worth about $5 million, simplifying the tax code, and then reduce taxes on top of the $343 million tax cut already proposed by Walker for a total of $787 million over the next two years, with even more to come later. It also would drop the number of income tax brackets from five to three and cut the standard tax form in Wisconsin from four pages to two pages.

The income tax overhaul will face opposition from Democrats and even some Republicans who believe tax cuts should be aimed at helping the middle class.  

For those who don’t think the Walker and Kooyenga plans belong in the same boat, there’s this: “I think the representative is on the right track,” Walker said at an event in Milwaukee.

The second part of Rep. Kooyenga’s bill exacerbates his hot pursuit of inequity by eliminating tax credits he views as having a “small impact.”

■ Remove tax credits such as those for film companies, harvesting wood for biofuel, and ethanol fuel pumps. Kooyenga’s proposal would nix some credits, such as one for jobs and another for working families credit, that might muster political support in spite of their relatively small impacts.

■ End the state’s so-called alternative minimum tax, which aims to ensure that taxpayers with plenty of deductions and exemptions still have to pay a certain amount of income tax.

■ Lower income tax rates further using any new sales tax money received from possible federal legislation to require out-of-state Internet retailers to collect the state sales tax.

Kooyenga’s plan would eliminate several tax credits aimed at state farmers and food processors.

The 2015-2017 budget which could potentially contain this tax overhaul will be voted on by the Legislature’s budget committee next week.

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