Wisconsin GOP’s Latest Bait and Switch? The Flat Tax!

I didn’t pay as much attention to the individual state assembly and state senate races at the mid-terms as I had in the past. I concentrated on my local races and the statewide races. But I don’t remember the Flat Tax being a mid-term election issue with anyone other than carpet bagger GOP gubernatorial candidate Tim Michels…who handily lost to incumbent Governor Tony Evers. So you would think the flat tax would be a moot point in Wisconsin. But you would be wrong. Instead we have this:

Wisconsin Senate Majority Leader Devin LeMahieu is expected to introduce a plan this week that would create a 3.5% flat tax. The proposal is similar to one floated by Republicans in the past, but will likely be blocked by Democratic Gov. Tony Evers…

So what is a flat tax, you say? A flat tax, also called a proportional tax, is an income tax that enacts a constant proportional rate to all taxpayers regardless of income. In other words, all taxpayers would pay the same percentage of their income to the government irrespective of their total earnings.

That sounds inviting doesn’t it? Well as you will hear, opponents (like myself) say that it disproportionately cuts taxes for the wealthy, particularly if the actual flat tax rate is the lowest rate from the current Wisconsin tax chart, while leaving the rest of us to continue to carry the burden. And the current income tax rates in Wisconsin run from 3.54% to 7.65%, so implementing a flat tax at 3.5% will provide those at the top of the rate chart about a 50% decrease in their state taxes. Given the record economic inequity in the country, the biggest in about 100 years, that doesn’t play.

Now the former governor of Wisconsin, Scott Walker, in another of his embarrassing attempts to remain relevant, likes the idea of a flat tax. He originally tweeted (the tweet apparently has been taken down…it isn’t in his Twitter feed today nor his Facebook timeline) [paraphrased]: Under the flat tax if someone makes 10 times more than you do, they will pay 10 times more taxes than you do. Well, yes, Scooter has got the math right but he’s got the economics wrong. If someone makes 10 times more than I, even at my reduced retirement levels, they should be paying 20 or 30 or 40 or 50 times more than I do. Anyone making that kind of dough can afford it. Anyone making that kind of dough should appreciate the benefits that they have and help others to achieve it too. Anyone making that kind of dough should be ready and willing to support the great State of Wisconsin at the level that they can afford…without regard to how much or how little others are able to contribute.

By the way, Senate Majority Leader Devin LeMahieu’s actual bill suggested that the flat tax rate be 3.25%. Lower than the expected proposal. Here is the entire article, but it is behind a paywall so you might not be able to see the entire text. But here’s some takeaways:

The Republican leader of the state Senate put forward a $5 billion proposal Friday that would dramatically overhaul income taxation in Wisconsin, creating a 3.25% flat income tax rate.

But the legislation is all but certain to be vetoed by Democratic Gov. Tony Evers, who has said he opposes substantial tax cuts for the state’s wealthiest residents, something Senate Majority Leader Devin LeMahieu’s bill would provide.

LeMahieu’s proposal would lower taxes for residents in every bracket to 3.25% by 2026.

Evers has said he wants to focus tax relief on the middle class and said in November he likely would not sign a state budget plan that would lower the state’s top income tax rates.

“When we deliver tax relief, it should be targeted to the middle class to give working families a little breathing room — not to give big breaks to millionaires and billionaires who don’t need the extra help to afford rising costs. That’s just common sense,” he tweeted in response to the proposal from LeMahieu.

I have some ideas about income tax changes for Wisconsin and I hope to publish them sometime later this week. But in the meantime, let me say, Sen. Ron Johnson can afford to pay the highest rate. Tim Michels can as well assuming he’s a tax resident of Wisconsin. Diane Hendricks can afford it. The Kohlers. The Menards. Culvers. The owners of Kwik Trip. There is no valid reason to give wealthy Wisconsinites a tax rate lower than their current rate or a tax rate at the lowest end of the scale where I suspect most of you reside.

The flat tax is a bad idea for the residents of Wisconsin.


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