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So how "Business Friendly" has Wisconsin gotten over the last 15 months? To answer that, we need to look no further than at the Wisconsin Manufacturing and Agricultural Tax Credit.The credit was enacted into law last year, as part of Gov. Walker's budget. It's being phased in over the next 4 years. Once fully phased in, beginning January 2016, individuals, corporations, and LLCs with agricultural or manufacturing income will be able to claim a 7.5 percent tax credit on that income against their state income taxes.
To see what that means, pull out your state tax forms. Now suppose you and your spouse earned a total of $50,000 last year, recorded on line 13 of the tax form. You get a $10,767 standard deduction (line 15), and a $1,400 exemption (line 17) for the two of you. When you look up your taxes on the remaining $37,833, the tax table says you owe $2,155, before credits. Your property tax credit (line 22) knocks off maybe $250, and the married couple credit (line 30) another $480, so you end up paying the state $1,425 in income taxes. And for each extra $600 you earn, you'll pay an additional $78 in taxes.
Now suppose it's 2016, and I and my wife earn $500,000 running a farm or factory. We also get a $1,400 exemption; from the tax tables we owe $34,838 before credits. The itemized deduction credit and property tax credits knock off about $800, and the married couple credit another $480, so our tax bill is down to $33,558.
Now if we made our half million selling shoes or giving piano lessons, we'd have to pay the $33,558. But we ran a farm or factory, which gives us a tax credit of 7.5 percent times $500,000. So we can subtract $37,500 from our tax bill, leaving us paying to the state – absolutely nothing.
Actually, it's slightly more complicated. If we got that $37,500 credit last year, that counts as income this year. So before credits, our tax liability would be $37,744; after the $800, $480, and $37,500 credits, we're down to zero again.
In fact, under Walker's tax credit, after 2015 a farm or factory owning couple could earn up to about $625,000 a year before owing a single dime in state taxes. And they could earn about $796,000 before they owe that same $1,425 that you have to pay on your measly $50,000 – because with the tax credit, they'll owe only an additional $5 on each extra $600 in agricultural or manufacturing income they earn.
So how "Business Friendly" is Walker's Wisconsin? Very, very friendly, if your business is a farm or factory. Which may explain why the Wisconsin Manufacturers and Commerce lobbyists so strongly support Walker and his fellow Republicans. After all, if you were them, wouldn't you consider your political donations as money well spent?
One more thing. The tax credit doesn't start until next year, at only a 1.375 percent rate. The year after that, it'll be at 3.75 percent, and so on. So next year, when a whole lot of people have their tax bills cut a bunch, and the year after that cut even more, don't be surprised if the state has a whole series of new budget crises to solve.
But that won't be a problem. Because we'll know who to blame. It'll be those greedy teachers, firefighters, prison guards, social workers, and other public employees. As usual.
So how "Business Friendly" has Wisconsin gotten over the last 15 months? To answer that, we need to look no further than at the Wisconsin Manufacturing and Agricultural Tax Credit.The credit was enacted into law last year, as part of Gov. Walker's budget. It's being phased in over the next 4 years. Once fully phased in, beginning January 2016, individuals, corporations, and LLCs with agricultural or manufacturing income will be able to claim a 7.5 percent tax credit on that income against their state income taxes.
To see what that means, pull out your state tax forms. Now suppose you and your spouse earned a total of $50,000 last year, recorded on line 13 of the tax form. You get a $10,767 standard deduction (line 15), and a $1,400 exemption (line 17) for the two of you. When you look up your taxes on the remaining $37,833, the tax table says you owe $2,155, before credits. Your property tax credit (line 22) knocks off maybe $250, and the married couple credit (line 30) another $480, so you end up paying the state $1,425 in income taxes. And for each extra $600 you earn, you'll pay an additional $78 in taxes.
Now suppose it's 2016, and I and my wife earn $500,000 running a farm or factory. We also get a $1,400 exemption; from the tax tables we owe $34,838 before credits. The itemized deduction credit and property tax credits knock off about $800, and the married couple credit another $480, so our tax bill is down to $33,558.
Now if we made our half million selling shoes or giving piano lessons, we'd have to pay the $33,558. But we ran a farm or factory, which gives us a tax credit of 7.5 percent times $500,000. So we can subtract $37,500 from our tax bill, leaving us paying to the state – absolutely nothing.
Actually, it's slightly more complicated. If we got that $37,500 credit last year, that counts as income this year. So before credits, our tax liability would be $37,744; after the $800, $480, and $37,500 credits, we're down to zero again.
In fact, under Walker's tax credit, after 2015 a farm or factory owning couple could earn up to about $625,000 a year before owing a single dime in state taxes. And they could earn about $796,000 before they owe that same $1,425 that you have to pay on your measly $50,000 – because with the tax credit, they'll owe only an additional $5 on each extra $600 in agricultural or manufacturing income they earn.
So how "Business Friendly" is Walker's Wisconsin? Very, very friendly, if your business is a farm or factory. Which may explain why the Wisconsin Manufacturers and Commerce lobbyists so strongly support Walker and his fellow Republicans. After all, if you were them, wouldn't you consider your political donations as money well spent?
One more thing. The tax credit doesn't start until next year, at only a 1.375 percent rate. The year after that, it'll be at 3.75 percent, and so on. So next year, when a whole lot of people have their tax bills cut a bunch, and the year after that cut even more, don't be surprised if the state has a whole series of new budget crises to solve.
But that won't be a problem. Because we'll know who to blame. It'll be those greedy teachers, firefighters, prison guards, social workers, and other public employees. As usual.
-Kevin McGee, professor in economics
Now that is an outstanding article and it has a very nasty sound. The best part of it is the last line where one can see the reason for it being written. Of course, none of those people included in that line has ever taken the taxpayers at all, have they?
You know the cutest thing I see in that is trying to use farmers (I am very sure that most of them make that $500k per year) as a weapon against union members. Cute but so damned false and failing.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
