ICYMI: “Economists Say Tim Michels’ Flat Tax Idea Would Only Benefit the Rich.”
“Michels regularly reports more than $1 million in state income taxes. That payment level suggests he has an income of up to tens of millions of dollars a year, meaning he would be one of the top benefactors of a flat tax.”
MADISON, Wis. — The Milwaukee Journal Sentinel yesterday reported that more than two dozen economists found Tim Michels’ flat tax proposal would primarily benefit wealthy Wisconsin residents like himself and his family while raising taxes on people who earn $25,000 to $300,000 a year.
According to the economists, only 3% of Wisconsin residents—the wealthiest Wisconsin taxpayers—would see an income tax cut under Michels’ flat tax proposal. This includes Michels himself, who regularly reports more than $1 million in state income taxes and would be one of the top beneficiaries of a flat tax.
Analysis from the nonpartisan Legislative Fiscal Bureau found that Michels’ flat tax proposal has two potential outcomes: either the state must significantly reduce spending on essential services like police, fire, and public education in order to offset the loss of tax revenue, or set the flat tax at a higher rate than most Wisconsinites currently pay, thereby increasing taxes on over 70 percent of Wisconsin taxpayers.
This is not the first time that Michels has backed a policy that would benefit his personal wealth.
Michels has expressed his hope that his family company will continue to bid on state contracts, but has refused to provide details on how he would avoid conflicts of interest and separate himself from the financial gains his family company stands to make if he becomes governor.
Previous reporting from the Journal Sentinel found that it will be next to impossible for Michels to avoid conflicts of interests with his family company as governor.
If Michels becomes governor, he’ll be in a position to further enrich himself and his family. He’s not even trying to hide his blatant conflict of interest and what he would gain from his tenure as governor if he is elected.
Milwaukee Journal Sentinel: Economists say Tim Michels’ flat tax idea would only benefit the rich
More than two dozen economists say a “flat tax” that Republican gubernatorial candidate Tim Michels has said he is open to would only favor Wisconsin’s richest residents.
Under the flat tax Michels has alluded to, about 3% of Wisconsin residents would get an income tax cut, while people making $25,000 to $300,000 per year would get an increase, said Michael Rosen, Milwaukee Area Technical College professor emeritus of economics and a longtime Democratic political activist.
People making more than $500,000 per year would get an average tax cut of $22,800 per year, Rosen said.
The findings were written in a letter signed by economics professors from universities in Wisconsin, Missouri, Illinois, New Jersey and Massachusetts and presented at a news conference Wednesday in Milwaukee.
Michels has provided few details about his tax plan, but during a campaign stop Oct. 5 at the Square Tavern in downtown Baraboo he said he thinks the tax could be about 5%.
“I’m going to sit down with all the smart tax people, we’re going to figure out how low we can get the income tax,” Michels said in Baraboo. “Right now, it looks like we could get it somewhere just below 5%. If you had a flat tax at that number, the tax level would actually come up for those on the lowest income bracket. I do not want to raise the taxes on anyone.”
Michels regularly reports more than $1 million in state income taxes. That payment level suggests he has an income of up to tens of millions of dollars a year, meaning he would be one of the top benefactors of a flat tax.
A new analysis prepared by Wisconsin’s nonpartisan Legislative Fiscal Bureau shows in order to enact a flat tax without significant spending cuts the new flat tax rate would have to be 5.22%.
If that were to happen, the bureau projects that about 73% of tax filers would see an increase of $249 per year, on average.
“Assuming the state legislature is unwilling to pass significant new regressive sales or property taxes, financing a flat tax would require massive spending cuts,” said Philip Rocco, a political science professor at Marquette University.
Michels has said that he is only interested in the flat tax if it doesn’t raise taxes for anyone. For that to happen, the flat tax rate would need to be 3.45%. That rate would be a windfall for the state’s richest taxpayers but would reduce Wisconsin’s revenue by $5.59 billion the first year and $3.855 billion every year after, according to economists.
For perspective, $3.855 billion is more than the University of Wisconsin-Madison’s total budget and seven times greater than the support that the state currently provides the university.
“A lot of Republicans talk about how they love the police, but are they willing to defund the police when they aren’t getting enough taxes to support it?” said Luz Sosa, an economics professor at MATC.