No, Walker's tax cuts won't help most of Wisconsin

To the surprise of no one paying attention, the Legislative Fiscal Bureau confirmed that Scott Walker's proposed income tax cuts will do next to nothing to the average Wisconsinite, and only give a boost to those who make big money.

The tax cuts would appply to all dollars of income up to $161,180 for single people or $214,910 for those married filing jointly, and dollars of income above those levels will stay at the same marginal rate as before. The LFB report reiterates that the tax cuts would be tiny reductions of marginal rates, but they'll add up to a big bill for the state.

In AB 40, the Governor proposes to reduce the rates that apply to the three lowest tax brackets, beginning in tax year 2013. The respective rates would decrease from 4.60% to 4.50%, from 6.15% to 5.94%, and from 6.50% to 6.36%. The Administration estimates that the proposed reductions would cause individual income tax collections to decrease by $172.6 million in 2013-14 and $170.6 million in 2014-15...the tax rate changes for 2013 would apply retroactively to January 1.

Then the LFB goes on to break down various income levels in Wisconsin and the amount of the tax cut they'd get. Here are a few selected ones for you, and I assume the LFB uses 2014 in their examples because they want to show a full-year effect.

Average income tax cut in Walker budget, 2014
$27,500 AGI, married jointly- $11
$27,500 AGI, single- $25
$55,000 AGI, married jointly- $63
$55,000 AGI, single- $71
$100,000 AGI, married jointly- $129
$100,000 AGI, single- $133
$200,000 AGI, married jointly- $239
$200,000 AGI, single- $223
$300,000+ AGI, married jointly- $303
$300,000+ AGI, single- $221

You can see that for lower-level Wisconsinites, this cut is virtually nothing (about $6 a month for the median income earner), but once you get to the higher incomes, they start becoming somewhat meaningful. However, it also slants the tax cuts toward the top incomes in the state, and the LFB illustrates that skewing as well (this will combine single and joint filers).

Distribution of tax cuts as % of tax returns.
$25,000 AGI and below 2.1% of tax cut, 16.9% of returns
$25,000- $50,000 AGI 4.7% of tax cut, 16.8% of returns
$50,000 AGI- $70,000 AGI 9.9% of tax cut, 14.5% of returns
$70,000 AGI- $100,000 AGI 22.4% of tax cut, 20.8% of returns
$100,000 AGI- $150,000 AGI 31.0% of tax cut, 18.9% of returns
$150,000- $200,000 AGI 14.0% of tax cut, 6.1% of returns
$200,000+ AGI 17.8% of tax cut, 6.1% of returns

So despite the fact that only 1 out 8 Wisconsin tax filers have over $150,000 in income, they stand to get nearly 1/3 of the the proposed Walker tax cut. Conversely, the bottom 48% of filers (those at $50,000 AGI and below) get 1/6 of the total tax cut. Nice distribution, isn't it?

And given the small amount that will go to the lower half of Wisconsin income-earners with these tax cuts, and that the changes in withholding probably won't come until at least July, two experts say this won't change much in terms of growing the economy.

"The governor has argued that by putting more money in people's hands, the tax cuts will spur economic growth in Wisconsin," said Andrew Reschovsky, a UW-Madison professor of public affairs and applied economics. "There is no evidence that the tax cut will do much to encourage growth and job creation."

Mark Schug, a UW-Milwaukee professor emeritus who now consults in the area of economic education, agreed such a cut is not likely to be an economic boost.

"I do tend to think that the income tax reduction is not sufficient," Schug said.

You know what would be sufficient? 1 of 2 things.

1. A tax credit for all 2012 tax filers- Probably of something like $200-$300. And the best way to do it would be paid would be as a rebate that goes directly to taxpayers immediately, instead of having to wait to file taxes the next year in order to receive it (a big mistake made in the stimulus). And you don't have the long-term deficit problem caused by keeping the rates at the lower levels, and the pain in the ass required to raise them back once the deficits sprout up.

Of course, this still means more cuts that we can't afford to make in Wisconsin for the next two years. So I'd prefer to do...

2. Send that $340 million to back to the schools, local governments, and universities that suffered cuts in the last budget. Not only are these better places to invest state funding in (due to the continued employment it would ensure in these fields and the higher productivity from a better-educated work force), but it also can limit the potential tuition hikes, property tax increases and fees that are resulting from Walker's cuts now, and will continue in the future (tax increases that will more than offset any Walker income tax cut for 2013-2015).

But this would go against Gov. Dropout's plan to funnel money to his rich contributors, and FUBAR state services by robbing it of revenue, causing it to have to be sold off to more campaign contributors. Plus, he wants to cynically say that he tried to lower taxes, no matter what it does to our state's budget deficit (the GAAP deficit is slated to rise another $600 million over these 2 years).

Heck, making things worse in the long-term just to strike some Confederate-style "low-tax" poses is a win-win for ol' Scotty, since it'll be harder for the Dem that replaces him to clean up his mess, and because this delusional fool thnks he can run for president in 2016. The dingbats who vote in GOP primaries love to live in Fantasyland, and this type of big-talk, small-result tax cut is right in their wheelhouse.

Granted, it could be difficult to run for president if he's in a jail cell or having it come 1 year after getting run out of office by angry voters, but when has reality gotten in Scott Walker's way before? And this idiotic tax cut that has the vast majority of benefits going to the richest Wisconsinites is just another example of it.