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Governor Walker's Tax Reform Initiative

Governor Walker's Tax Reform Initiative . Wisconsin Department of Revenue April 2013. Tax Reform Goals. Reduce Wisconsin's high tax burden Put more money in people's pockets Make Wisconsin more competitive with other states Direct the most relief to areas where it's needed the most

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Governor Walker's Tax Reform Initiative

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  1. Governor Walker's Tax Reform Initiative Wisconsin Department of Revenue April 2013

  2. Tax Reform Goals • Reduce Wisconsin's high tax burden • Put more money in people's pockets • Make Wisconsin more competitive with other states • Direct the most relief to areas where it's needed the most • Middle class income tax relief is a priority • Provide broad-based tax relief • Don't increase taxes for any taxpayers

  3. Wisconsin's Tax Burden Is HighThe individual income tax burden is especially high, and reducing income taxes will reduce Wisconsin's overall tax burden Source: Calculation of tax burden per $1,000 of personal income based on U.S. Census Bureau, 2010 Annual Survey of State and Local Government Finances, Issued September 2012

  4. Wisconsin Income Taxes Are Especially High for the Middle Class Wisconsin's Rank by Income Class, 2008 Source: Minnesota Department of Revenue, 2008

  5. Current 2013 Wisconsin Individual Income Tax Rates and Brackets Middle Class Income Tax Rates Are High Tax rates are relatively high for our second and third brackets, and taxpayers move into those brackets quickly

  6. Governor Walker's Tax Reform InitiativeReduces Middle Class Income Tax Rates Overall Income Tax Reduction From Rate Cuts: $343 million (Amount of reduction in budget bill for Tax Years 2013 and 2014)

  7. Income Tax Payments Are Reduced For Taxpayers At All Income Levels Middle Class Taxpayers See the Greatest Relief No taxpayers see tax increases

  8. Middle Class Taxpayers See the Greatest Income Tax Relief The share of relief directed to middle class taxpayers is greater than the middle class share of total tax payments

  9. Taxpayers Will See Significant Savings • Typical family will see income tax savings of $212 for two years of 2013-15 budget cycle • Savings of $106 per year for Tax Years 2013 and 2014 • Family with two adults working, two children and median family of four income of $80,607 • Tax liability under current law would be $3,510 per year Department of Revenue Individual Income Tax Model, Adjusted for 2013 Income Levels and Law

  10. Reversing Direction on State Taxes State taxes have been cut in the most recent two budgets 11-13 budget 13-15 budget Biennial tax reduction compared with base year Total tax cuts from income tax rate cuts and other initiatives: $1.043 billion in two budgets Source: Department of Revenue

  11. Holding the Line on Property Taxes Property taxes have been controlled in the most recent two budgets

  12. Tax Relief is an Ongoing Effort • The middle class income tax relief in the 2013-15 budget is possible due to spending control and sound fiscal management • The income tax reform package in the 2013-15 budget is paid for and is fiscally responsible • Tax reduction will continue in the future as the Wisconsin economy expands and more jobs are created

  13. Wisconsin's 2009-10 State and Local Revenue Rankings Appendix 1 • The most recent combined state and local revenue rankings are displayed above • Ranks exclude the District of Columbia Source: U.S. Census Bureau, 2010 Annual Survey of State and Local Government Finances, Issued September 2012

  14. Comparing Wisconsin's Average Effective Income Tax Rates Appendix 2 Wisconsin exceeds national average at all income levels except the lowest quintile Source:Who Pays?, January 2013, Institute on Taxation and Economic Policy

  15. Tax Cuts In 2013-15 Budget Bill Appendix 3 Total tax cuts: $635 million in 2013-15 budget bill Source: Department of Revenue calculation of fiscal effect relative to FY13 base

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