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  • 2017-06-02 (xsd:date)
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  • Richest 1 percent pay lowest rate of state and local taxes in Wisconsin? (en)
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  • Two weeks after indicating he will run for governor of Wisconsin in 2018, the leader of a nonprofit organization that encourages citizens to challenge the political establishment listed some of the reasons why. The potential candidate is Mike McCabe , who runs Blue Jean Nation and was a founding member of the Wisconsin Democracy Campaign, which tracks money in politics. Appearing on the May 21, 2017 edition of Capital City Sunday, a public affairs show on WKOW-TV in Madison, McCabe said the state needs to raise the minimum wage to turn that into a living wage and make education debt free. He added: And we’ve got to change a tax system -- when you look at all the state and local taxes we pay in Wisconsin, the wealthiest 1 percent pay the lowest overall tax rate. Claims about the 1 percent , or the richest of the rich, are among our most popular. Let’s see how this one stands up. His evidence McCabe, who says he is not a member of any political party, cited a 50-state analysis of state and local taxes published in January 2015 by the Institute on Taxation and Economic Policy, a left-leaning research organization based in Washington, D.C. Experts told us it is the only recent report of its kind on state and local taxes in Wisconsin. The report measured total state and local taxes as a share of family income for non-elderly taxpayers. In Wisconsin, according to the report, the top 1 percent pay a smaller share of their income in taxes than other income groups: Lowest 20%: Less than $22,000 Second 20%: $22,000 – $38,000 Middle 20%: $38,000 – $61,000 Fourth 20%: $61,000 – $91,000 Next 15%: $91,000 – $163,000 Next 4%: $163,000 – $399,000 Top 1%: +$399,000 8.9% 10% 10.2% 10.2% 9.2% 7.8% 6.2% (Nationwide, the gap was wider: The bottom 20 percent of earners pay 10.9 percent of their income in state and local taxes each year, compared to 5.4 percent paid by the top 1 percent.) It’s important to note that while the study supports McCabe’s statement, it uses a methodology that is accepted by some experts but criticized by others. Todd Berry , president of the nonprofit Wisconsin Taxpayers Alliance, told us that any effort to assess who bears the burden of state and local taxes depends in part on assumptions that are made. Jared Walczak , an analyst with the Center for State Tax Policy at the free market-oriented Tax Foundation in Washington, D.C., said this study’s assumptions do not provide a meaningful way to assess the question about the 1 percenters in Wisconsin. The Tax Foundation expressed criticism at the time and Walczak emphasized to us that the study omits some taxes altogether -- such as business license taxes, gross receipts taxes and severance taxes. And the study includes one federal provision -- the federal income tax deduction for state and local taxes paid -- to make state tax systems look more regressive. However, data for the omitted taxes were not available, the institute told us. And even if the federal deduction were not considered, the richest 1 percent in Wisconsin would still have a lower state and local tax burden than other income groups in Wisconsin. Richard Auxier , state and local tax policy expert at the nonprofit Tax Policy Center, noted state and local taxes in the vast majority of states, including Wisconsin, are regressive: They rely largely on sales and property taxes, which generally take a bigger bite out of the incomes of lower income people than higher income people. He also said that although Wisconsin’s income tax is relatively progressive, its earned income tax credit, which eases the income tax burden on lower-income residents, isn’t overly generous. So, given the generally regressive nature of taxes states rely upon, McCabe’s statement is not surprising. Indeed, if he made the statement about 48 of the 50 states (except Alaska and California, plus the District of Columbia), it would be on target, according to the report he cited. Our rating McCabe says: When you look at all the state and local taxes we pay in Wisconsin, the wealthiest 1 percent pay the lowest overall tax rate. His claim is based on a 2015 report which found that the top 1 percent of earners (income of $399,000 and above) pay 6.2 percent of their income in state and local taxes -- a lighter burden than six lower income groups. It’s important to note that the report’s methodology has its critics, but it is the latest available study that attempts to assess state and local tax burdens. With that caveat, we rate the statement Mostly True. More fact checks on the richest Mark Pocan: Under Trumpcare, the Republican replacement for Obamacare, $600 billion worth of tax breaks will go to the wealthiest in this country. Half True . Jennifer Shilling: Under Donald Trump's tax plan, the top 0.1 percent of taxpayers -- people earning multiple millions of dollars a year, on average -- would get more tax relief than the bottom 60 percent of taxpayers combined. True . Bernie Sanders: The top one-tenth of 1 percent of Americans own almost as much wealth as the bottom 90 percent. Mostly True . Jeb Bush: The top 1 percent pay 45 percent of all taxes in the country. Half True . Share the Facts 2017-06-06 18:32:56 UTC PolitiFact 5 1 7 PolitiFact Rating: Mostly True When you look at all the state and local taxes we pay in Wisconsin, the wealthiest 1 percent pay the lowest overall tax rate. Mike McCabe Founder, Blue Jeans Nation In an interview Sunday, May 21, 2017 2017-05-21 Read More info (en)
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