Thursday, January 22, 2015

The truth about Wisconsin’s regressive tax scheme

The poor and middle classes are paying higher rates in excise, sales and income taxes than the top 1 percent in the state

Taxes in Wisconsin. We talk about them all the time, mostly about how they’re too high and unfair.

It turns out that’s only half the story. They’re too high and unfair, for sure, but only for certain people -- the poor and middle classes.

The highest 1 percent of income earners in the state -- households earning more than $399,000 annually -- pay just 5.6 percent of their earnings towards excise, sales and income taxes on average.

You’d expect that, in a generous society like Wisconsin’s, the poorest among us would be paying a significantly smaller portion of their income towards taxes.

You’d be wrong. The poorest 20 percent of households in Wisconsin (those that earn less than $22,000 yearly) are paying, on average, 5.8 percent on those same taxes.

The poor and middle class pay higher rates than the top 1%

The extremely poor are paying more proportionally than the extremely wealthy. That’s fairness in taxation? That’s how Scott Walker’s reforms are supposedly making things better for the state?

Things weren’t like this before Walker came to office. In 2009 the lowest 20 percent of earners in Wisconsin paid the same rate as the highest 1 percent of earners when it came to excise, sales and income taxes. But now, the tax reforms that Walker has implemented places the tax burden on the backs of the poor and middle classes.

Think about it this way: for every $50 earned the wealthiest in the state are paying $2.80 in excise, sales and income taxes. Meanwhile, low-income Wisconsinites are paying $2.90 for every $50 that they earn.

It’s a worse situation for the middle class. Families earning between $38,000 to $91,000 annually are paying around 7 percent of their incomes towards excise, sales and income taxes. For every $50 they earn, they can expect to pay $3.50 towards those taxes.

Taxes are, of course, a necessity in any society. We can complain about them all we want, but if we want the services that government provides, we can’t expect to pay nothing.

Yet expecting the weakest among us to shoulder a higher burden than the most affluent is mind-boggling. Apparently it’s business-as-usual for Scott Walker and his Republican-run legislature.

For most Wisconsinites, it’s just strictly unfair.

The statistical information for this post came from the Institute on Taxation and Economic Policy (ITEP). You can find the information at their website.

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