The LFB says that the price tag has risen for the M&A credit in each year it has been in effect, and it will continue to go up during the 2017-19 budget.
You requested information regarding the estimated fiscal effect of the MAC by state fiscal year since the credit took effect. It is estimated that the MAC reduced state tax revenues by $15.7 million in 2012-13, $80.5 million in 2013-14, $147.4 million in 2014-15, $209.0 million in 2015-16, and $262.1 million in 2016-17. The estimated revenue loss is $275.5 million in 2017-18 and $294.8 million in 2018-19….The LFB also updated its information estimating the income levels of the people taking the M&A credit in their upcoming tax filings. And like before, it’s the mega-rich that are most likely to use this writeoff, and get the most from it.
As shown above, the manufacturing portion of the credit accounts for approximately 92% of the total revenue reduction and the agricultural portion accounts for 8%. Approximately 78% of the credit is estimated to be claimed under the individual income tax and 22% under the corporate tax.
Income levels and total of M&A credit recipients
Under $100,000- 38.1% of recipients, 2.6% of tax break
$100,000-$250,000- 26.7% of recipients, 5.5% of tax break
$250,000 to $500,000- 13.2% of recipients, 6.5% of tax break
$500,000 to $1 mil- 10.2% of recipients, 11.9% of tax break ($25.6 mil)
$1 mil to $5 mil- 9.8% of recipients, 34.0% of tax break ($72.5 mil)
$5 mil to $10 mil- 1.3% of recipients, 14.6% of tax break ($31.5 mil)
$10 mil to $30 mil- 0.6% of recipients, 12.25% of tax break ($26.5 mil)
$30 mil+ 0.1% of recipients, 12.8% of tax break ($27.6 mil)
That last part is especially shocking, as Wisconsinites making over $10 million are set to get back almost as much money from this M&A tax break as everyone that makes $1 million or below. That’s despite more than 7/8 of the recipients making $1 million or below, vs only 1 in 148 recipients making $10 million or more.
Rep. Hintz noted that the M&A tax credit not only shoveled huge amounts of money to the rich, but that those funds were then unable to be used for services that are much better at creating jobs and improving life in Wisconsin.
“Governor Walker’s track record of prioritizing tax cuts for wealthy special interests is well documented. This giveaway is a glaring example of a Governor who doesn’t understand how the economy works in 2018,” stated Rep. Hintz. “This tax credit was not tied to any job creation benchmarks, making it a ‘nostrings attached’ benefit to those who need it least. $1.3 billion dollars in taxpayer money is shocking on its face, but made even worse when assessing the opportunity cost. This is state money that could have been used on public schools, the UW System, or transportation infrastructure. Between this tax credit and the FoxConn deal, Governor Walker has handed the people of Wisconsin a bill for $5.8 billion.”
That’s backwards and regressive enough, but now this M&A giveaway will be even more unnecessary in future years because the Piece of Shit tax bill in Congress gives even more tax breaks to these rich people and corporations. Why do these corporations and the ultra-rich need help at the state level any more? And given that the needs of this state keep growing, this especially wouldn't be a bad time to reconfigure the state's tax system to reduce the cost of the Big Giveaway.
And the funds collected from reducing and or dumping the M&A tax cut could be used to fix our deteriorating roads and allow for local governments to have an easier time paying for police and fire services, which would prevent the need for even more wheel taxes and local sales taxes. Everyday Wisconsinites have had to shell out millions more for those additional local taxes during the been paying a higher share of while the rich, corporate and connected have been getting the massive breaks from the M&A credit.
It's well past time to reverse that, and to bring an end to the Big Giveaway.
EDIT- And look, we are already seeing how the new tax law is helping one Wisconsin manufacturer
Kimberly-Clark, the maker of Huggies and Kleenex, says it will cut 5,000-5,500 jobs, about 13% of its workforce.
— Kyle Griffin (@kylegriffin1) January 24, 2018
To help pay for the cuts and other restructuring moves, Kimberly-Clark said, it will use savings from the recently enacted corporate tax cut. https://t.co/6kZafTvEX0
And this is such an effective tax incentive that we only need to give Foxconn an additional $4.5 billion to get them to locate in WI!
ReplyDeleteIt would be interesting to see how much Foxconn increases the amount paid out for this credit -- though we will probably never find out. Foxconn might not get much from this credit if they are shipping what they make out of state -- because then the revised formula for allocating corporate profits would minimize their tax liability, without the help of the man./ag. credit.
In any case, the billions of dollars of new Foxconn subsidies will come on top of the already extremely generous tax treatment of manufacturers.
Jon- You so correct on this. It's yet another reason the Fox-con is absurd, because manufacturers already get a ton of breaks in this state.
DeleteIf the M&A credit is so successful in attracting jobs, then why are we writing checks to Foxconn ON TOP OF THAT?
And now Foxconn gets another break from the Feds with the new tax law? Don't tell me we are too broke to fix our roads and fund our schools.
I read somewhere that each 1% of tuition reduction at the UW costs the state about 8 million.
ReplyDeleteSounds like we could phase out the break for recipients with income over 500k, (that retains it for almost 80% of them) and reduce tuition at the UW by about 30%.
Maybe we can reduce student loan debt in this state and get the younger generation spending. It would probably do more for the economy than lining a small number already pretty stuffed pockets.