Wednesday, March 29, 2023

As "Big Giveaway" to Wis manufacturers gets bigger, lower-incomes lose EITC, Homestead Credits

Interesting release from the Legislative Fiscal Bureau today that updated some of the numbers from the Informational Papers that were released last month. And it gives some additional insight into just how things have been shifted toward corporations and away from low-income Wisconsinites since Scott Walker and the Wisconsin GOP took power in 2011.

One of the updates related to the Manufacturers and Agriculture Tax Credit (aka The Big Giveaway), which reduces the tax liability for these types of Wisconsin businesses (and many of their owners) down near zero. With more complete tax information, the LFB says that Giveaway was even bigger than we thought, totalling more than $437 million in Fiscal Year 2022.

And now you have a good idea where WMC gets those millions of slimy SCOWIS ads that they're spreading around the TV these days.

Conversely, fewer Wisconsinites have been able to qualify and use two lower-income tax writeoffs over the same time period. One is the Homestead Credit, which gives assistance to low-income renters and homeowners, and the other is the Earned Income Tax Credit, which is geared toward lower-income parents. These figures have now been updated through the 2021 tax year.

The Homestead Credit hasn't had its income limits or maximum write-off changed since 2011, and you can see how inflation and other changed have caused more than half of 2011's recipients to "roll off" and become ineligible for the credit. Likewise, the EITC had its state credit reduced in 2011, and the maximum credit for Wisconsinites with 2 and 3 children is lower now than it was 12 years ago, meaning the credit doesn't pay nearly as much as it used to.

Governor Evers is looking to reverse both of these trends in the 2023-25 budget. He again wants to limit the M&A tax cut, this time only allowing manufacturers to take the M&A credit on $300,000 of manufacturing income. That would be a big change for mega-millionaires that have been able to apply the M&A Giveaway to an unlimited amount of income, leading to millions in tax breaks in each years. He's tried to do some version of this in the last 2 state budgets, and the gerrymandered GOP Legislature has turned him down both times, with a third rejection likely to come in the next few weeks.

Likewise, Evers wants to boost the tax break for the EITC, giving tax relief for those lower-income families by $60.7 million in the first year it's in effect, and $63.8 million in the following year. Evers also wants to expand the income levels eligible for the Homestead Credit, allowing Wisconsinites that make $35,000 or less to be able to get that write-off, and indexing the credit and income levels for inflation, to avoid having people roll off like they have in the last 12 years.

That's something Evers has asked for before, without help from WisGOP legislators in the past. But if Janet Protasiewicz can win the Supreme Court race next week, I wonder if the GOP Legislature starts realizing that they'd better start helping the working poor in this state, because they might not have their gerrymander around in 2024 to save them. And maybe they'll use a fraction of our $7 billion surplus to give some needed relief for those Wisconsinites.

Between the MAC, the EITC, and the Homestead Credit, you can see how our tax code has been slanted to favor the rich and corporate and to take away assistance to lower-income Wisconsinites over the 12 years of gerrymandered GOP control. Maybe 2023 brings something different, especially if the gerrymander is in line to be slain.

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