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It’s one of Madison’s worst-kept secrets: Republicans at the Capitol want to cut state income taxes, and hope to take up the issue in the 2013 legislative session, which begins in January.
The question is: Cut them for who?
On that, it’s a good idea to listen to Rep. Robin Vos, the Republican from Rochester who was elected Nov. 13, 2012 as speaker of the state Assembly.
Vos made clear in a recent WisPolitics interview that his top priority is a middle-class income tax cut.
"If you’re poor in Wisconsin, it is one of the best places in the country to be poor. We’re in the bottom 10 states as far as paying taxes if you’re poor," Vos said in the interview. "If you’re successful, we are in the middle. I think we’re number 15 or 16 ..."
"But if you’re a person in the middle class, somebody who makes $20,000 to $200,000, you’re in the top 4 or 5 worst places in the country to be a middle-class income taxpayer."
Vos went on to tell WisPolitics that Republicans want an across-the-board income-tax cut, though the "primary benefits" would go to the middle class. When we asked him to clarify what he meant, he told us fiscal constraints might preclude -- for now -- reducing income tax rates on upper-income earners for whom legislative Democrats and Gov. Jim Doyle raised the top rate in 2010.
So, is Vos right about how the income tax burden affects low and middle-income earners?
When asked for backup, Vos pointed us to research presented to the bipartisan Steering Committee on Income Tax, a study group chaired by Vos that was set up through the nonpartisan Wisconsin Legislative Council.
Lower-income workers: Vos said their income tax burden is in the bottom 10, and it’s clear from the complete interview he meant among the 41 states that levy a personal income tax.
In a November 2009 study, the nonpartisan, liberal Institute on Taxation and Economic Policy (ITEP) ranked the burden on the lowest one-fifth of Wisconsin’s earners as the 29th-lowest among those 41 states.
That’s not quite bottom 10, but the group’s executive Matthew Gardner told us the difference between Wisconsin and the lowest rung of the bottom 10 was so "trivially small" as to be meaningless.
Another 50-state study, by the Minnesota Taxpayers Association in 2011, ranked the low-income burden in Wisconsin as either 32nd- or 34th-lowest for married couples at $10,000 or $20,000. Both are bottom 10.
In Wisconsin, as in several other states, the working poor often have a "negative" income tax bill -- they get tax credits that wipe out their tax liability and in some cases result in a payment to them from the state.
Wisconsin would be lower in these rankings, but some states pay even larger credits.
Middle-income earners: Vos said this group faces a top-five burden.
Income taxes paid by Wisconsin married couples and single heads of household in the $75,000 to $100,000 income range are fifth-highest in the country, based on the Minnesota study. The Wisconsin Department of Revenue indirectly cited the Minnesota study in testimony before the Vos-chaired study group.
A sub-group of all married couples -- senior couples making $100,000 -- have the fourth-highest.
The Minnesota group’s research director, Aaron Twait, said he considers the $100,000 mark for two earners a classic middle-class household, based on average incomes in Wisconsin and Minnesota.
In addition, the ITEP study shows only four states collecting a higher average tax rate than Wisconsin in the $57,000-$88,000 range.
So Vos has evidence to back up this part of his claim.
But when you look at other levels within Vos’s middle-class range of $20,000 to $200,000, the burden is not quite as heavy as Vos said.
For example, at the $150,000 level in the Minnesota study, the rankings are No. 10 for singles, No. 8 for married couples filing jointly and No. 9 for single heads of household. Again, that’s among the 41 states with an income tax.
At $50,000, we found a mix of rankings between No. 3 and No. 7.
Finally, Vos mentioned one other income group, the "successful," by which he meant upper-income. It’s not part of the claim we’re testing, but Vos said that group’s income-tax burden was in the middle of the 41 states.
That’s basically on target. We found tax-burden rankings from No. 11 to No. 17 for top earners in categories such as $250,000, $500,000 and $1 million annual income. These rankings were from the Minnesota study. The ITEP study also shows the rankings falling as income rises.
Vos said that when it comes to income taxes, Wisconsin is "one of the best places in the country to be poor" but "top 4 or 5 worst" for middle-income earners.
He’s mostly on target here, based on credible tax studies showing a very low burden on the working poor, compared to a very high burden on many middle-income earners.
Not all the middle-income earners face a top-5 tax burden, though: It’s top-10 for some in the middle-class as he defined it.
We rate his claim Mostly True.
WisPolitics.com, audio of interview with Rep. Robin Vos (tax discussion starts at 19:00 mark), Nov. 8, 2012
PolitiFact Wisconsin Interview with Rep. Robin Vos, Nov. 8, 2012
Interview with Kit Beyer, spokeswoman for Rep. Robin Vos, Nov. 8, 2012
Interview with Laurel Patrick, spokeswoman, Wisconsin Department of Revenue, Nov. 9, 2012
Interview with Aaron Twait, research director, Minnesota Taxpayers Association, Nov. 9, 2012
Interview with Matt Gardner, executive director, Institute on Taxation and Economic Policy, Nov. 9, 2012
Presentation by Department of Revenue, "Strategic Considerations for Individual Income Tax Reform," Oct. 18, 2012
Institute on Taxation and Economic Policy, "A Distributional Analysis of the Tax Systems in All 50 States," Third Edition, November 2009
Minnesota Taxpayers Association, "Comparison of Individual Income Tax Burdens by State," September 2011
Email exchange with Lisa Erickson, spokeswoman, Minnesota Department of Revenue, Nov. 8, 2012
Wisconsin Legislative Council, Steering Committee on Income Tax, accessed Nov. 8, 2012
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