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Analyst: Wealthy Get Best Deal from Wisconsin Tax Structure

A report from a nonpartisan organization shows those with the highest incomes in Wisconsin are paying a lower percentage in taxes than people of modest means. (Zerbor/iStockPhoto.com)
A report from a nonpartisan organization shows those with the highest incomes in Wisconsin are paying a lower percentage in taxes than people of modest means. (Zerbor/iStockPhoto.com)
May 2, 2016

MADISON, Wis. – While the wealthiest Americans have seen their earnings skyrocket in recent years, incomes have stagnated for many others in the country, according to Tamarine Cornelius, a research analyst for the nonpartisan Wisconsin Budget Project.

She conducted a study that concludes Wisconsin's tax system, like the state and local tax systems in most states, make the problem worse. She has the specifics for Wisconsin.

"Taxpayers in the lowest 20 percent by income pay 8.9 percent of their income in state and local taxes, whereas taxpayers in the top 1 percent pay only 6.2 percent,” she states. “So that's a group with an average income of about $1.1 million."

Cornelius’s study shows that the majority of Wisconsinites in the middle-income ranges pay around 10 percent of their income in state and local taxes.

She also points out many Wisconsin corporations pay little or nothing in income taxes.

Another element of the report indicates that Wisconsin's middle class, which was not that many years ago one of the strongest in the nation, is now shrinking faster than in any other state.

Cornelius says there are a number of reasons for this, including the fact that Wisconsin's population is older and growing slower than in other states.

"Another reason is the decline of manufacturing in the United States,” she stresses. “Wisconsin's economy depends very heavily on manufacturing jobs and those jobs used to be good, solid middle class jobs – still are, often, if you can get one – but there's a lot fewer of them."

According to Cornelius, there are ways the state could help those who don't take home huge paychecks. One would be to reverse the recent cuts in the state's tax credits for low-income households.

Another would be to avoid a trend toward what's called tax swaps, where states cut income taxes and raise sales taxes.

"So you wind up with the same amount of money but you do kind of a tax swap,” she explains. “And when that happens, the result invariably is enormous tax increases for people who are not earning very much money and correspondingly large tax cuts for people who are making a lot of money."

Tim Morrissey, Public News Service - WI