If Gov. Scott Walker has anything to do with it, wealth will be moving up the social ladder in Wisconsin. The governor, who repeatedly promised no new taxes for any Wisconsinites, has proposed raising taxes on the poor to make up for the lost revenue from tax cuts for businesses the legislature approved earlier this year.
The Governor's budget bill would repeal the 2009 change that indexed the Homestead Tax Credit to inflation.
This tax credit provides targeted tax relief to about 250,000 low-income households in Wisconsin. The Legislative Fiscal Bureau explains:
"The program is often referred to as a "circuit breaker" since it is intended to provide relief once property taxes exceed a taxpayer's ability to pay them. Relief is provided as a credit reducing individual income tax liability or as a cash refund if the credit exceeds income tax due; the homestead credit is referred to as a refundable credit due to this characteristic."
So as the real estate market steadily recovers, and property owners and renters begin to pay more in taxes, the credit the poorest among them receive will stay the same. It's just a few dollars, Walker reasons. Think of all the corporate welfare we could fund if every poor person in the state pitches in a couple hours worth of wages.
While there are elements of small government conservatism in some quarters of the Republican Party, in general the GOP is an advocate for business first and limited government second...or third or fourth or fifth. Imprisoning drug users, promoting Christianity and invading foreign countries are other priorities that Republicans put ahead of maintaining a Jeffersonian republic.
My question is: If the tax credit is not adjusted for inflation, isn't that the same as slowly killing it? And no, the governor is not going to make up for the different by capping property tax increases. Those, unlike the tax credits, will change with inflation.
Keep the Homestead Tax Credit in mind the next time you hear a Republican complaining that capital gains taxes, which almost exclusively target the wealthy, are unfair because they don't account for inflation.
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