The credit does not require proof of job creation and is heavily skewed toward Wisconsin’s wealthiest tax filers.
A Republican-enacted tax credit primarily benefiting millionaires and corporations has cost the state more than $2.8 billion in the last decade, according to a February memo from the nonpartisan Legislative Fiscal Bureau (LFB). The memo was produced for Senate Majority Leader Devin LeMahieu (R-Oostburg), who requested the LFB to tabulate all tax policy changes from 2011, when Republicans took over the Legislature, through the current tax period that ends in 2023. It shows the Manufacturing and Agriculture Credit (MAC) has cost the state $2.86 billion in that period.
The credit has a name that implies benefits for a wide swath of farmers and manufacturers being rewarded for job creation, but the progressive research group Wisconsin Budget Project has shown how tax filers with income of $1 million or more—who make up only 0.2% of all filers—got 76% of the total credit, with no proof of job creation required.
Wisconsin Budget Project Director Tamarine Cornelius said in 2017, for example, 11 of the tax filers who claimed the credit each had income of more than $30 million, and each had their taxes reduced more than $2 million.
Republicans claimed the MAC would cost the state $617 million over its first seven years. Instead, it deprived the state of $1.4 billion by 2019—a cost that doubled to $2.8 billion in the new report through 2023.
Reviewing the rest of the LFB memo, Cornelius posted on Twitter that Republican tax changes during the 12-year period include:
- “$635 million for capital gains tax cuts, which favor income from wealth over income from work. About 75% of capital gains go to the top 1% of taxpayers.”
- “$270 million for an income tax deduction for the cost of private school tuition. This is separate from the tuition voucher program and it does not have any upper income limit for eligibility. Tax filers who make more than $100K get 2/3 of this credit.”
“There is more,” Cornelius goes on to post, “but you get the picture. Over the past decade, tax changes have stripped billions from our schools, communities, and health care system, and redirected that money to the rich and powerful who have rigged the system for their own benefit.”
Republicans are likely to use other information in the memo as part of their re-election campaigns, emphasizing certain tax benefits, such as increasing the standard deduction for couples filing jointly (cost: $146 million) or giving a deduction for teachers’ expenses (cost: $8.8 million). But as Cornelius noted, tax cuts don’t happen in a vacuum and someone else either pays more taxes to make up the difference or, more likely, fewer dollars are available to provide services.
Some Republicans want to take the idea one step further and eliminate the state income tax altogether—a decision that could starve public schools, medical assistance, and other public services.
State Sen. Roger Roth (R-Appleton), a candidate for lieutenant governor, recently sought co-sponsors for such a proposal. Last year, the personal income tax accounted for by far the largest share—almost $9.3 billion, or 46%—of the state’s tax income, according to the Department of Revenue.