..on low-income, working families.
In other words, the wrong people.
As Wisconsinites await W-2 forms and related tax documents, hundreds of thousands of low-income families are bracing for a state budget change that will mean less money in their wallets next year.
Last summer, the state Legislature reduced the amount of money low- income families can receive in tax credits by $56.2 million.
That places Wisconsin among only a handful of states that will effectively raise taxes on their poorest residents in 2012, according to a recent study by the Center on Budget and Policy Priorities, a nonprofit think tank. [...]
The 2011-2013 state budget reduces the percentages for families with two or more children, which the state Legislative Fiscal Bureau considers a net tax increase.
Starting next year, low-income families with two children will be capped at 11 percent of the maximum federal credit, or $562, down from $716.
Families with three or more children will be limited to 34 percent, or $1,955, down from $2,473.
That may not sound like a lot of money unless you’re living paycheck to paycheck, and most of those who will be affected by this are.
Of course a modest tax increase would be easier to accept if, within the same budget, Scott Walker had not also instituted new tax cuts for corporations and the wealthy.
The combined cost of the tax cuts in the budget bill and in other bills already enacted this year will be $212 million in 2011-13, and the cumulative tally over the next ten years is projected to be $2.3 billion. Because many of the tax cuts are delayed or phased in, their annual price tag will grow steadily and will add to the state’s structural deficit. That impact (calculated by measuring the future fiscal impact relative to the effect in 2012-13) will be a $109 million boost to the structural deficit in the 2013-15 biennium and $238 million in the following biennium.
All of the new tax cuts benefit corporations or wealthy Wisconsinites. However, two other changes in the budget bill will raise taxes for seniors and low-wage workers by $70 million over the next two years – by cutting the state Earned Income Tax Credit by $56.2 million and by ending indexing of the Homestead Tax Credit (i.e., ending inflation adjustments to the Homestead credit formula). That change will cost low-income Wisconsinites $13.6 million over the next two years, and that amount will grow steadily in the years ahead as inflation erodes the value of the credit.
During the 2011-2013 time-frame, taxes on the rich will be cut by $212 million, while taxes on those with low-incomes will go up by $70 million. And as the Center on Budget and Policy Priorities notes, tax credits for low-income families are more directly stimulative because they are more likely to be spent on essential goods and services while the wealthy simply pocket it.
Meanwhile, Scott Walker also presided over the largest cut to education funding of any state that provides current-year data.
Wisconsin has the dubious distinction of reducing state aid per student this school year the most of 24 states studied by an independent, Washington-based think tank, the Center on Budget and Policy Priorities.
According to a preliminary study released Sept. 1 by the nonprofit research organization, the dollar change in spending from the last fiscal year to this year dropped $635 per student under Gov. Scott Walker’s budget that took effect July 1. New York was in second place, cutting state school aid $585 per student. California was third at $484.
The study only reports on the 24 states where current-year data is available. Those states educate about two-thirds of the nation’s K-12 students.
Governor Scott Walker continues to be one of the best campaigners Democrats could ever hope for.