They just can't help themselves. Even in a time when public education from Kindergarten to Graduate School is being demolished, Wisconsin Republicans still want to cut taxes for those who are already doing quite well. This time they want to get rid of the state's alternative minimum tax.
Republican Rep. Dale Kooyenga said Thursday he plans to propose doing away with the tax that brought in just over $26 million in the 2013 tax year. He said that cut will be made up with raising taxes elsewhere, so there is no net reduction in tax collections.
Kooyenga said his proposal will be brought up for a vote before the Joint Finance Committee, perhaps as soon as Wednesday.
The people who would be most likely to benefit from any AMT "fix" would be individuals and couples who make four to five times the
Wisconsin median household income of $51,467. As
the Wisconsin Budget Project points out in a must-read primer on this issue, the overwhelming majority of people who would benefit from this tax cut are very well off.
In the middle of a strong piece on Blogging Blue that categorizes
the many economic failures under Gov Scott Walker that have been in the news, I found a reference to the
LFB budget paper that goes over the Alternative Minimum Tax (AMT). This has an updated price tag on
Koo-Koo Kooyenga's plan to abolish the AMT, and also gives more information on just how slanted toward the rich that this plan is.
First of all, the paper makes it clear that the first round of Koo-Koo tax cuts in 2013 are the major reason that there was a huge jump in richer Wisconsinites paying the AMT, which leads to Koo-Koo's desire to "reform" it in 2015.
4. The largest increases, both in the count of taxpayers subject to the minimum tax and in AMT liability, occurred for taxpayers with AGI of $200,000 to $500,000. In this income group, the count increased from 2,552 to 20,081, and the total AMT liability increased from $2.2 million to $14.3 million. By combining the third and fourth tax brackets, Act 20 (the 2013-15 Wisconsin Budget) created a bracket which is quite wide, compared to the two lower tax brackets. In tax year 2013, the third tax bracket reached from $21,490 to $236,599 for single filers and from $28,650 to $315,459 for married-joint filers. Prior to the Act, the marginal tax rates for the two tax brackets were 6.5% and 6.75%, but the marginal rate for the combined brackets is now 6.27%. Previously, the marginal rates were at or above the AMT rate, but now the rate for the combined brackets is below the AMT rate.
5. The juxtaposition of the marginal tax rates and the AMT rate results in taxpayers in the third tax bracket (6.27%) more likely to be subject to the AMT than persons in the top tax bracket (7.65%). Under the new tax structure, taxpayers in the 6.27% bracket can incur an AMT liability while claiming few or no tax preference items in calculating their regular tax. Higher income taxpayers are more likely to have enough of their income taxed at the 7.65% rate under the regular tax so that they do not have an AMT liability unless they also claim tax preference items. It can be argued that this treatment between the two taxpayer groups is contrary to the purpose of the AMT, which is to ensure that taxpayers are not able to eliminate their regular tax liability through tax preference deductions.
It's a classic example of WisGOPs reacting to the consequences of their first idiotic tax cut (which led to major deficits that resulted in sizable cuts to education in Gov Walker's 2015-17 budget) by doubling down and doing a second one to "fix the problem they caused.
Naturally, the overwhelming number of people who would benefit are people who make well above the typical Wisconsinite's level of income. In 2013, here's a simple breakdown of the income tax levels of Wisconsinites that paid the alternative income tax.
Payers of Wisconsin AMT, 2013
Under $200,000 26.3%
$200,000+ 73.7%
So this "reform" helps the richest Wisconsinites by nearly 3-to-1, and the Wisconsin Budget Project shows that they would also be the people getting a major payoff under this plan.
Getting rid of the AMT is not a small tax cut that can be easily absorbed in other parts of the budget. As the LFB points out, it'd create a sizable hole in an already deficit-ridden budget.
Repealing the Wisconsin alternative minimum tax, effective in tax year 2015, would decrease individual income tax collections by an estimated $33.1 million in 2015-16 and $29.8 million in 2016-17. In tax year (2015 ??), an estimated 31,000 taxpayers are estimated to have an AMT liability under current law provisions.
That adds up to
a $62.9 million budget hole! And you can bet that hole gets larger in later years due to inflation, and the lower base of tax revenues that the state would have to start from. If you take Dale (Koo-Koo) Kooyenga at his word where getting rid of the AMT would be "revenue-neutral", then that means
there are nearly $63 million in tax increases to be sprung on people somewhere else in the budget. You can bet those tax hikes are not going to be put back on the same rich folks getting the break from removing the AMT, but instead will be paid by everyday working Wisconsinites.
You're seeing the typical cycle of GOP/ALEC fiscal policy play out in this instance, and these steps are true for either the revenue or expense side.
1. Cut
2. Problem crops up because of step 1.
3. Do another cut to "fix" step 2, and/or do something to hurt a third party that never got a benefit from step 1. Never reverse or modify what you did in step 1 to cause step 2.
Which gives away the real goal of this "reform" of the Alternative Minimum Tax in Wisconsin- to funnel even more money away from everyday Wisconsinites, and into the pockets of the rich and connected. And if it's really done right, that extra money will then trickle downâ¦.in the form of campaign contributions to the GOP politicians that vote for this giveaway.
Why is why this AMT move has to be recognized as plain old THEFT which will further hamstrings a budget that already will dish out major economic damage to the state of Wisconsin. This move needs to be forcefully pushed back against, as proof of who Koo-Koo Kooyenga, Scott Walker, and the rest of the Wisconsin GOP are truly working for- and it ain't you and me.