Zimmerman column: Returning money to taxpayers
Shannon Zimmerman represents the 30th District in the Wisconsin State Assembly
There is bipartisan consensus in Madison that your income taxes should be cut. While I applaud our new Governor for recognizing this as a priority, we have yet to reach an agreement on how to make this work.
A little background; both parties have vowed to cut taxes for the middle class, for roughly the same group of people (individuals and families making less than $100,000 and $150,000 respectively). The Republican plan simply increases the standard deduction by 20.6 percent, returning surplus revenues to the taxpayers who created that surplus, with the median income family experiencing an approximate $300 (or 10 percent) reduction in net tax liability.
In short, we have the surplus, this is your money, and you should keep it.
Gov. Evers also wants to cut taxes, but would do so by creating a new tax credit, increasing the earned income tax credit, and capping what is known as the Manufacturing and Agriculture Tax Credit (MAC) at $300,000. This would not only hurt the affected businesses directly, but also indirectly harm anyone doing business with them, such as farmers wanting to sell milk to processing plants.
The problem with this plan is it is a tax shift, not a tax cut.
This is puzzling given how great the state is doing financially. In December we found out Wisconsin has $588.5 million in extra money for this past fiscal year. Over the coming 2019-21 budget, we are expected to have $2.4 billion available for spending, meaning returning $495.6 million to hardworking taxpayers is pretty darn reasonable.
The Governor has said he can't support the Republican plan, because it doesn't have a source of funding for the future. He has called the credit a "handout" for "wealthy corporate interests," with a spokeswoman saying the Governor's plan would create a "fairer" tax code.
But Gov. Evers' plan doesn't even reach his stated goal of having "a source of funding for the future." Capping the MAC credit would cover a little more than half the revenue difference, leaving $370 million unaccounted for.
Further, the MAC is not a "handout," but a valuable tool for job creation. A 2017 study done at UW-Madison sought to isolate the effects of the MAC credit by comparing employment in our border counties with our neighbors. The study found that, since its introduction, the MAC accounted for a total gain of over 20,000 manufacturing jobs and over 42,000 total jobs in Wisconsin.
The state is in great shape not in spite of tax breaks, but because lowering taxes has made Wisconsin more affordable for living and business investment. Rather than focusing on picking winners and losers with a "fairer" tax code, we should invest in our taxpayers by returning what is theirs.