Over at the Shepherd Express, Joel McNally has a great piece explaining how masterfully Gov. Scott Walker has played tax-cut politics to the benefit of the richest Wisconsinites at the expense of poor and middle class Wisconsinites who could really use some meaningful tax relief.
Every state takes a higher percentage of income in local and state taxes from middle class and poor taxpayers and redistributes it to the wealthy in lower taxes. (The report excludes taxpayers over 65 because of wild variations among the states in how Social Security and other retirement incomes are treated.)
Here are the numbers for Wisconsin when family income is divided in fifths:
The lowest 20% in income in Wisconsin pay 8.9% of their family income in state and local taxes. The second lowest 20% pay 10%. The mid 20% pay 10.2%. So does the fourth 20%. That’s 80% of taxpayers.
Now look what happens to the top 20% in family income. The lowest 15% of that wealthy group pay 9.2% in state and local taxes. The next 4% pay 7.8%. And the top 1% pays only 6.2% in state and local taxes.
There’s a simple explanation for the gross—in every sense of the word—disparity. Most state revenue everywhere is raised through sales and excise taxes hidden in the price of every purchase.
Middle class and poor taxpayers spend most of what they make from paycheck to paycheck, paying taxes on almost every expenditure. The wealthy don’t.
As wealth at the top in this country continues to break records, the wealthy can’t possibly spend it all. They invest it to make even more money on their money, which is taxed at a lower rate.