Keeping wealthy here
Republican gubernatorial frontrunner Scott Walker is promising to eliminate the income-tax bite on retirement income. Wisconsin already exempts Social Security from its income tax.
The La Crosse Tribune reported that Walker made the promise to eliminate the state income tax on other retirement income “which he says hurts investment in Wisconsin because wealthy retirees flee to more taxfriendly states.”
Earlier Walker said he’d push to repeal new income-tax provisions enacted to help balance the state’s recession-ravaged biennial budget for 2009-11. The tax changes include a new 7.75 percent tax on net income on annual income above $300,000 for a couple and $150,000 for an individual.
“Some in Madison will tell you that it was put on the wealthy,” Walker told the Tribune, “but the problem is most small business people get taxed on that level.”
Walker also said he wants to reverse the new “combined reporting” on corporations. The new provision was aimed at ending corporate loopholes and preventing major firms from shifting profits to low-tax states.
Critics say combined reporting hurts job creation. Walker said Milwaukee-based Harley-Davidson had to pay another $22.5 million in corporate taxes as a result.
All the tax-cutting talk from Walker will renew focus on how he would actually balance the state’s 2011- 13 biennial budget. Fiscal experts say the new governor and Legislature will be facing a $2 billion gap between on-going revenues (before any tax cuts) and spending.
The gap includes the $556.3 million in federal stimulus money, which is being used as part of state aid to school districts.
State government is required to balance its books at the end of the biennium. That’s unlike the federal government, which borrows billions of dollars from China and other countries.
Tax and budget issues dominate state governments across America. California, New York and Illinois are facing large problems. Arizona is talking about privatizing government services, including things like selling prisons to investors.
While Walker is focusing on the personal and corporate income tax, this is December – the month when property tax bills are mailed. Those bills will be larger in most parts of Wisconsin.
Some states don’t have income taxes, but they have substantially higher sales taxes. Wisconsin’s income tax became a reality nearly a century ago. Farmers and others pushed for the income tax as a way to reduce what they saw as excessive property taxes.
Many might still feel that way when they open their property tax bills this month.
