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In a TV ad released Sept. 11, 2014, Democrat Mary Burke looked into the camera and showed a bit of a whimsical side. You know who had a really good idea about taxes? she asked. Ronald Reagan. Surprised you, didn't I? Burke praised the late Republican president’s 1986 expansion of the federal Earned Income Tax Credit . It reduces the income taxes owed by low- and moderate-income workers, or enables them to collect a tax refund. Burke then pivoted to GOP Gov. Scott Walker. You know who had a really bad idea? Governor Walker, she said. He did just the opposite, cutting taxes for the wealthiest and raising them on 140,000 Wisconsin families. Is that Walker’s record on taxes? Tax cuts ‘for the wealthiest Let’s start with cutting taxes for the wealthiest, the first part of Burke’s claim. Has Walker helped richer folks? Sure. His first state budget, for 2011-’13, plus other measures adopted in 2011, provided tax cuts to corporations, businesses, manufacturers and investors, among other groups. The Legislative Fiscal Bureau, the nonpartisan scorekeeper on state budget matters, estimated their value at $2.33 billion over 10 years. The largest tax cut, done through tax credits for production earnings of manufacturers and agricultural businesses, helps not only corporations but also individual owners of smaller businesses. Indeed, we rated Mostly True a claim that the credits would enable a factory owner -- in some scenarios -- to pay less in state income tax on those production earnings than a minimum-wage fast-food worker. But Walker has also cut income taxes across every income bracket. His second budget, for 2013-’15, lowered rates (while reducing the number of tax brackets from five to four) And later, in 2014, Walker signed legislation that dropped the lowest rate again ( from 4.4 percent to 4 percent ). Here are examples are for married couples filing jointly. Taxable income Tax rate/Previous law Tax rate/Current law Up to $14,540 4.6% 4% $14,540 to $29,090 6.15% 5.84% $29,090 to $215,000 6.5% 6.27% $215,000 to $320,250 6.75% 6.27% $320,250 and over 7.75% 7.65% *Taxable income levels shown are current. The income levels were slightly lower under the previous law. For example, the first tax bracket was up to $14,000 income, rather than $14,540. A few points on the table: The lowest bracket applies to all taxpayers. In other words, all tax filers are subject to the 4 percent tax rate on their first $14,500 of income, then the rates go up as taxable income reaches higher levels. Reduced tax rates don’t help if your income is so low that you don’t owe any income tax. In that vein, some groups advocate for expanding the state Earned Income Tax Credit, which can result in more taxpayers receiving income tax refunds after their returns are filed. Burke’s campaign pointed out that couples earning $29,090 got a tax rate reduction from 6.15 percent to 5.84 percent, but couples earning up to $320,250 got a larger reduction, from 6.75 percent to 6.27 percent. In addition, the income tax changes enacted under Walker include other breaks for people across many income levels, including those with health savings accounts and those who send their children to private schools . So, Walker cut taxes for the wealthy, but for a broad cross-section of taxpayers, as well. Tax increases Now to the other part of Burke’s claim -- that Walker raised taxes on 140,000 families. Walker’s first budget, for 2011-’13, contained what the Legislative Fiscal Bureau classified as $49 million in tax increases. The largest change was a reduction in the state Earned Income Tax Credit which, as we’ve noted, reduces the amount of income taxes a person owes or enables the person to get a tax refund. The fiscal bureau calculated that about 140,000 recipients would see their credits reduced. In other words, they would pay more in taxes or get a smaller tax refund. Here’s how the maximum credits were reduced for families with two or more children: Family size Maximum EITC/Previous Law Maximum EITC/Current Law One child $124 $124 Two children $716 $562 Three or more children $2,473 $1,955 So, 140,000 fewer lower-income people received the state Earned Income Tax Credit. About three-fourths of the money in the state Earned Income Tax Credit program pays for income tax refunds for those lower-income people, rather than reducing any state income tax they owe. Tamarine Cornelius, an analyst with the Wisconsin Budget Project, which is part of the liberal advocacy group Wisconsin Council on Children and Families, said most of the 140,000 who lost their credits would not save enough from the reduction in income tax rates to make up for that loss. In other words, they’d be paying more in income taxes or be getting a smaller refund. Dale Knapp, research director of the nonpartisan Wisconsin Taxpayers Alliance, said he believes most of the 140,000 would benefit to some extent from the tax rate cuts, but that he didn’t know whether that savings would offset the lost tax credit. Our rating Burke said Walker cut taxes for the wealthiest and raised taxes on 140,000 Wisconsin families. Walker cut taxes for wealthier residents and raised taxes for people on the lower end of the scale. But he also made tax cuts that applied across the board. The statement is partially accurate but leaves out important details. We rate it Half True. To comment on this item, go to the Milwaukee Journal Sentinel’s web page .
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