Huge Tax Giveaway Benefits Mostly Millionaires
By State Senator Julie Lassa
Recent polling shows that a large majority of Americans believe our economy is “rigged” to benefit those at the top at the expense of everyone else. Some troubling information revealed last week provides a concrete example of how that’s actually happening right here in Wisconsin.
In 2011, Republicans in the State Legislature passed the Manufacturing and Agriculture Tax Credit. It gradually reduced the amount of income tax that corporate taxpayers in these industries owed. Now that the credit is fully phased in the credit wipes out nearly all of these corporations’ tax liability. In fact, someone claiming this credit would owe no more than 0.15 percent in income taxes. And the companies themselves aren’t required to create or retain even one job – in fact, they could send thousands of jobs overseas and still get this credit.
Last week we learned that, according to the Department of Revenue, 78 percent of the tax credits distributed through this program went to millionaires. In fact, 11 individuals – some of Wisconsin’s wealthiest residents – claimed over $21 million in these tax credits last year alone. The Legislative Fiscal Bureau projects that this one tax credit will cost Wisconsin more than a half billion dollars over the biennium, more than twice what it was originally expected to cost. And that cost is only likely to keep right on growing.
I am in favor of using smart tax incentives to help improve our economy. I have been an advocate for the Angel and Early Stage Seed tax credits that encourage investment in Wisconsin start-up companies, and the Jobs Tax Credit that was tied to the creation of good-paying jobs. But five years after it was passed, Manufacturing and Agriculture Tax Credit has had no discernible impact on getting corporations to move to or expand in our state. Wisconsin continues to lag behind the national average and other Midwestern states in new job creation, and many of the jobs that have been created pay less than the ones we lost. And, according to a report by Pew Charitable Trust, Wisconsin’s middle class shrank faster than any other state in the nation. Simply put, this hugely expensive tax giveaway isn’t bringing Wisconsin the economic boon Republicans promised.
When we put this in the context of the huge cuts to our public schools and universities, the selling off of our public hunting and fishing lands, and the crumbling of our roads, it’s clear what’s going on here. The public commonwealth is being cannibalized so we can give huge tax cuts to multi-millionaires. Instead of investing in things that would improve our economy and help struggling middle-class families get ahead, Wisconsin Republicans are throwing money at wealthy people who aren’t required to create or retain one job to get it. This is yet one more way of dumping the burden of paying for public services and infrastructure onto the backs property taxpayers. It’s no wonder so many people feel that the economic deck is stacked against them; here in Wisconsin, it is.
The Manufacturing and Agriculture Tax Credit is corporate welfare at its worst. This is no way for the state to carry out economic development. If we’re going to ask taxpayers to invest in job creation initiatives, we have to build in safeguards to make sure jobs are actually being created, and that they stay here in Wisconsin. We should be targeting our efforts to the small businesses that create most of the new, family-supporting jobs in our state. Taxpayers should demand that the Manufacturing and Agriculture Tax Credit either be tied to the creation or retention of good paying jobs or be repealed. They deserve to have their tax dollars work just as hard as they do.
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