Koch Group and Milwaukee Business Group Back Tax Cuts for Wealthy

May 10, 2017

A GOP Assembly income tax cut and road-funding proposal would eventually cut taxes for Wisconsin’s wealthiest residents by $1 billion.

The GOP plan drew kudos from the Metropolitan Milwaukee Association of Commerce, and Americans for Prosperity, a rightwing electioneering group backed by billionaire brothers Charles and David Koch.

Under current law, the state has four income tax brackets ranging from the 4 percent rate paid by low-income earners to 7.65 percent paid by high-income earners. The GOP Assembly proposal would gradually replace those brackets with a single, flat income tax rate of 3.95 percent for all earners in tax year 2029.

A Legislative Fiscal Bureau analysis released Tuesday showed that by 2029, more than $2 billion of about $2.7 billion in tax cuts that the proposal would create just in that year would go to taxpayers earning $100,000 or more. More than $519 million in tax cuts would go to those making $1 million or more.

Some of the taxpayer dollars the state would lose under the plan would be offset by eliminating numerous tax credits and exclusions, including the alternative minimum tax paid by wealthy earners, capital gains exclusions, and breaks for working families, married couples, and renters. The proposal would eliminate many of the tax credits in tax year 2019 and result in more than 740,000 tax filers getting a tax increase averaging $248 and about 1.5 million filers getting a tax cut averaging $262 that year, the analysis showed.

The road-funding portion of the plan would effectively increase the net state tax that drivers pay for gasoline, according to another state fiscal analysis of the plan released last week.

Between January 2010 and December 2016, Americans for Prosperity secretly spent an estimated $5.7 million to help elect conservatives and Republicans for statewide office and the legislature. During the same period, the Metropolitan Milwaukee Association of Commerce contributed more than $1.7 million to two secretive outside electioneering groups, known as 527 organizations, that helped elect Republican Gov. Scott Walker and GOP legislative candidates. 527 groups are loosely regulated by the U.S. Internal Revenue, but may raise and spend unlimited amount of money from any source on state and federal elections.

In addition to its 527 contributions, the Milwaukee business group’s political action committee doled out about $68,885 – all to Republican legislative and statewide candidates between January 2010 and December 2016.

The GOP tax and road-funding plan is intended as a legislative addition to the proposed 2017-19 state budget proposed by Walker, who said he opposes increasing gas taxes but has been largely silent on the income-tax changes in the plan.