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Back in the 1990s, a bipartisan movement decided to end “welfare as we know it” and put more emphasis on work. Wisconsin Republican Gov. Tommy Thompson led the way for states, and President Bill Clinton was the key architect nationally. The approach recognized that the available jobs often paid poorly and didn’t provide enough to support a family. Rather than interfere with the free market and the low level of wages paid, the approach emphasized increasing the earned income tax credit, both in terms of the amount of the credit and the number participating in the program.
It was, in fact, Republicans who started the Earned Income Tax Credit (EITC) in this state in 1989. To hell with that, says Gov. Scott Walker, in yet another example of where he parts company with what were once mainstream Republican values. His budget would slash the tax credit by $41.3 million.
Figures from the non-partisan Legislative Fiscal Bureau show that 77 percent of those who qualify for the EITC make so little money they pay no state income taxes. But Walker seized on this to argue he was not increasing taxes, merely taking away money that is given to taxpayers by other taxpayers.
One sign of how radical a measure this is comes from the critical response of Todd Berry, president of the Wisconsin Taxpayers Alliance, which routinely praises any move that cuts government spending. “I think it’s good tax policy and good social policy because it rewards work rather than discouraging it,” he said of the EITC. “I would have looked for savings somewhere else. “
Nearly as bad is Walker’s decision to reduce the amount of the Homestead Tax Credit by $8.1 million. This measure, too, was seen as a way to help low-income homeowners and renters, helping buffer the latter from increases in rent by landlords. To claim the credit last year, filers had to have household income of less than $24,680. Most taxpayers aren’t eligible. Only 247,000 people claimed the credit in 2010; the average credit awarded was $520.
As a recent story in News Buzz showed, the value of the Homestead tax credit had already dropped in real dollar value by 27 percent since the early 1990s. The Homestead tax credit was for years the only part of the tax code that was not indexed for inflation. In 2009, the legislature recognized the injustice and indexed it for inflation. But Walker wants to repeal that measure, which will save the $8.1 million this year.
Meanwhile, the non-partisan Legislative Fiscal Bureau has just revised its tax projections upward for the upcoming three years by more than $600 million, which gives Walker a lot more money and wiggle room with his budget. Why not give first consideration to the poorest among us?
That’s essentially what the Evangelical Lutheran Church in America (ELCA) bishops who serve the six synods of Wisconsin urged, criticizing the Walker budget, specifically mentioning reductions to the Earned Income Tax Credit, which they said “would dramatically impact low-income working families by cutting one of the most successful tools available to escape from poverty.” They also expressed concern about cuts to Medicaid and other health care changes that would hurt “vulnerable adults.”
It’s not too late for a little more compassion – and a return to the more generous philosophy of Gov. Thompson – by Walker and GOP legislators.
The Buzz:
-As I’ve written before, Gov. Scott Walker and the new wave of Republicans are at odds with business leaders who typically want transportation to include better transit. Thus the Metropolitan Milwaukee Association of Commerce has come out in opposition to Walker’s plan to eliminate any transit funding from the state transportation budget. Walker’s approach contradicts decades of bipartisan agreement that roads and transit belong in the budget. The only argument was over what percent should go to transit. Walker, in theory, would allow transit funding to come out of general funding, but that leaves it in competition with state aid to schools, the UW budget, prisons and the like, where it will be a so low a priority it may not get a dime.
-Walker’s choice to chair the Wisconsin Employment Relations Commission, James Scott, has long experience working with a law firm that helped companies stop unions from organizing, as a JS blogger notes and Blogging Blue condemns.
